What is the difference between “TIF” and “urban renewal”?
Essentially, they are the same thing. Urban renewal was established by the Federal Housing Act of 1949 to provide funding for cities to invest in affordable housing and urban infrastructure projects in impoverished areas. Unfortunately, in many areas urban renewal has had devastating consequences, resulting in mass displacement of minorities and underrepresented populations in cities around the country, including Portland. For many, the term urban renewal evokes these past practices. Because of this, the City of Tigard has made the conscious decision to instead use the term tax-increment financing (or TIF), which is used consistently in other parts of the nation. Throughout the City of Tigard website, you will now see the use of TIF Districts, though we leave language and references to urban renewal in previously adopted plans.
What is tax increment financing (TIF)?
Tax increment financing is a powerful funding tool currently in place in over 75 communities across Oregon. It is used to help areas that are not performing well and/or lack public infrastructure by funding projects that fix identified problems and spur private investment that would otherwise not happen under normal market conditions.
What does tax increment financing do?
Tax increment financing uses property taxes from within an area to fix identified problems in that same area. It often focuses on improving an area’s transportation and utility infrastructure since these kinds of improvements can unlock an area’s development potential. Tax increment financing can also be used to attract and retain small businesses, support affordable housing, and develop public spaces such as parks, plazas, and trails.
How does tax increment financing work?
When a Tax Increment Financing (TIF) District is established, the County Assessor determines the current assessed value of all property within the district, and freezes that tax base. Tax revenue from this “frozen base” continues to go to taxing districts annually for the life of the TIF District. Tax revenue on any increase in property value that would occur anyway—from new development and/or appreciation—is allocated to the TIF District Agency for projects in the TIF District. This increase above the frozen base is also called the “increment.” When the TIF District expires, the frozen base also expires, and the local taxing districts resume receiving taxes on the full assessed value of the district.
What are the benefits of TIF Districts for Tigard?
- Improves Tigard’s Long-Term Financial Health - By bringing in new businesses and development, TIF increases Tigard’s tax base over time which, in turn, helps fund future city services for all of Tigard residents.
- Provides a Stable Funding Source - By creating a stable, long-term funding source (without creating a new tax), the city can build or fix infrastructure that it may otherwise delay, or never be able to afford.
- Steers Investment Toward an Area Ready for Change - By focusing on areas already zoned for mixed-use commercial and residential density, TIF steers investments toward parts of Tigard that are the readiest for change.
- Furthers Tigard’s Walkability Goal - TIF can help further the city’s goal of becoming a more walkable, interconnected and healthy community by transforming auto-oriented districts with no or limited sidewalks into pedestrian-friendly areas with a diverse mix of destinations and activities.
- Supports Travel by Alternate Modes - By fostering the creation of a complete community – one which has jobs, housing, services, and transit – TIF can make travel by alternate modes (travel by foot, bike, or transit) feasible.
How are decisions made about tax increment financing?
The Town Center Development Agency (TCDA) is the City of Tigard’s TIF District and is responsible for administering the City Center and Tigard Triangle plans. The Board of the Town Center Development Agency are the decision makers of the agency. The membership of the Board is made up of the Tigard City Council. The Town Center Advisory Commission makes recommendations to the board on policy, budget, and implementation of tax increment financing projects.
Who is affected by TIF Districts?
TIF Districts have a financial effect on local taxing districts, but the impact is different for schools than for other districts. TIF Districts do not directly affect school districts because schools are funded through the State School Fund. Property tax revenues are an offset under the statewide school funding formula, and property tax revenues foregone by school districts because of TIF may be replaced with other State School Fund revenues.
Other taxing districts, such as Tualatin Valley Fire & Rescue, are directly affected by TIF. While a TIF District is active, revenue from that area is frozen, which means that taxing districts will not receive as much money as they would have otherwise received for the life of the TIF District. In essence, taxing districts forego some revenue now in exchange for an increase in their total property tax base later as a result of TIF Since the goal of TIF is to spur development that would otherwise not have occurred, taxing districts can expect to receive more tax revenue in the future than they would have had TIF Districts never existed.
Is TIF a new tax?
TIF is not a new tax on property anywhere in the city—TIF only changes how tax revenue is allocated. The revenue to pay for projects in a TIF District is self-generated by new development and property appreciation in the district. Tax bills for property owners within a TIF District do not increase because of TIF; it only changes how tax revenues are allocated. Read more about how it all works below.
Why does Urban Renewal/TIF Districts show up as a line item on my tax bill?
Voters approved the formation of a TIF District in Downtown Tigard in 2006 and in the Tigard Triangle in 2017. If you own property in the city, TIF shows up as a line item on your tax bill as (UR/Tigard) whether or not you own property in the TIF District, which can be confusing.
Technically, a portion of your taxes are going to the TIF District, but that’s only because of a 2002 court decision and subsequent 2003 legislation that requires the County Assessor to calculate the division of taxes in a very specific way. Even though the TIF District agency is not a taxing district, your tax bill treats it like a taxing district by showing it as a line item with a separate tax rate as required by law. In actuality, however, this line item does not represent a new tax, or result in a larger tax bill than would otherwise occur. Instead, it represents a division of tax dollars, collected from all properties in the city in an amount equal to the growth in assessed value inside the TIF District. When the TIF Districts expire, your property tax bill will not decrease. Property tax dollars will be redistributed to the existing taxing districts.
