Tax Increment Financing (TIF)

As Secretary of Finance, John R. Farris helped draft the State’s new TIF law in 2007. TIF is a form of economic incentive, which uses the increase in local and state tax revenues generated on a development footprint (the increment) to finance certain costs of a project. Financing is typically structured with local governments issuing tax increment bonds, the proceeds from which are used to pay for approved project costs. Annual tax increments are then used to retire the bonds over time.

Currently, in the Commonwealth of Kentucky there are three state TIF participation programs available:

• Real Property Ad Valorem Tax Revenue Program
• Mixed-Use Redevelopment in Blighted Urban Areas Program
• Signature Project Program

 

Services
In order to give a TIF project the highest chance of success, Commonwealth Economics provides the following services:

TIF Feasibility & Impact Analysis

This analysis includes an overall assessment of the size and scope of the proposed TIF project, detailed assessments of each potential project element in direct relation to the governing statutes, and recommendations to refine the project in order to meet TIF qualifications. Additionally, provisions required by the project development team to enhance the project’s applicability are taken into consideration. Further, our services include financial analysis, quantitative analytics and tax revenue projections for the state and local TIF taxes related to the project.

State & Local Approval

Commonwealth Economics will work alongside the TIF project development team and/or local government in the execution of required local TIF ordinances and coordinate the state TIF application process every step of the way. This includes conducting the required TIF business surveys necessary to calculate the correct tax baseline.

TIF Compliance

Complying with the TIF statutes is a complex and ongoing process. Commonwealth Economics works with local governments, state government, and private developers to assure proper compliance with the TIF statutes at all stages of the process. Accurate and timely reporting is crucial to ensure maximum TIF reimbursement. CE provides expertise with the following compliance services:

• Contractor record keeping and invoicing requirements
• Capital expenditure reporting
• Ongoing business tax reporting
• Annual increment calculations and requests to state and local governments

 

Experience
Commonwealth Economics (CE) has extensive experience in guiding municipalities and developers through the TIF approval process in order to promote economic development that is mutually beneficial to both the municipalities and the developers involved in the creation of the proposed project. CE is a leader in developing economic impact analyses, market analyses, fiscal analyses and feasibility studies for its clients in both the public and private sectors. Below are a few examples of these projects:

  • The Summit Lexington
  • City of Owensboro
  • Midway Station
  • Metro Louisville
  • City of Georgetown
  • CentrePointe Lexington
  • Midland Avenue
  • University Village Lexington
  • Nucleus: University of Louisville Foundation
  • Oak Grove Village
  • Phoenix Park/ Courthouse
  • Distillery District
  • Rupp Arena & the Lexington Convention Center
  • Paddocks of Woodford
  • Turfland Town Center
  • Red Mile Mixed-Use Development