TIF Project Example
This demonstrates how TIF works with a hypothetical project. In this example, the developer owns a lot valued at $10,000 located in the redevelopment area.
The developer is going to construct a building on the property such that the valuation of the property after the project will be $250,000.
The annual TIF available for fifteen (15) years would be approximately $4,933:
| Project phase | Valuation | Taxes |
|---|---|---|
| Pre-project: | $10,000 | $205 |
| Completed project: | $250,000 | $5,138 |
| Difference (Increment): | $240,000 | $4,933 |
Assuming that a developer can borrow at a 6% interest rate, the TIF revenue collected for 15 years could pay off a $47,910 loan in this example.
| Year | TIF |
|---|---|
| 1 | $4,933 |
| 2 | $4,933 |
| 3 | $4,933 |
| 4 | $4,933 |
| 5 | $4,933 |
| 6 | $4,933 |
| 7 | $4,933 |
| 8 | $4,933 |
| 9 | $4,933 |
| 10 | $4,933 |
| 11 | $4,933 |
| 12 | $4,933 |
| 13 | $4,933 |
| 14 | $4,933 |
| 15 | $4,933 |
| Total: | $73,995 |
Present Value of $73,995 @ 6% = $47,910
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