How has it been used by local Government? - by Pete Kelly
A Tax Increment Grant (TIG) is a tool used by City/County to partner with private developers to enable projects that promote economic growth and land use planning goals. The simple mechanics result in an amount of investment by CITY/County into the project. The private developers gain a rebate in their annual property taxes until the amount of agreed upon investment is reached. This diverts the new developments annual public tax revenue from the general fund until the TIG amount is reached.
Developer A want to build a new office building that will bring new jobs to the city. The developer partners with the Economic Development teams of both the City/County to agree upon an amount that will make the project an attractive investment for investors. The developer communicates that the project will not be financially viable (pencil out) absent the public funding.
Proposed Project - $500 million in investment creating XX jobs.
Developer Requested Public Funding - $25 million
Property Taxes generated by $500 million investment = $5 million / year
Developer would receive a property tax refund for 5 years ($25 / $5) totaling $25 million
This tool has been used historically by City/County to attract new businesses and to assist in the development of large projects that will lead to economic development.
Per the City’s Economic Development Page:
TIGs are provided on a reimbursement basis only and the project must demonstrate its benefit to the general public. Examples of reimbursable improvements through a TIG include but are not limited to, new public infrastructure such as roads, streetscapes, and parking decks. A TIG may also be employed to assist in gap funding for developments shown to achieve the City’s goals and objectives (e.g. affordable and workforce housing, job creation, etc.) but would not be financially feasible without assistance from the City.