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:
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 six (6%) percent interest rate, the TIF revenue collected for fifteen (15) years could pay off a $47,910 loan in this example:
Present Value Calculation Case Example:
Year TIF Year TIF
1 $4,933 9 $4,933
2 $4,933 10 $4,933
3 $4,933 11 $4,933
4 $4,933 12 $4,933
5 $4,933 13 $4,933
6 $4,933 14 $4,933
7 $4,933 15 $4,933
8 $4,933 Total $73,995
Present Value of $73,995 @ 6% = $47,910