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Tax increment Financing <br />The concept of tax increment financing is that the in- <br />crease in real estate taxes by facilities constructed <br />because of public inducements are used to pay for the <br />public inducements. This method of financing allows for <br />communities to create an economic development tax incre- <br />ment district for a period of eight years. When a tax <br />increment district is created, the assessed value of the <br />district is determined and "frozen" at the base value. As <br />the assessed value within the district increases above the <br />base level, the increase is termed the "captured assessed <br />value". This captured tax increment is then applied <br />directly towards retirement of the public inducements. <br />Several types of bonds may be issued by the City to <br />finance the improvements within the district. A municipal <br />G.O. tax increment bond is perhaps most applicable. This <br />type of bond is issued ultimately backed by the full <br />faith, credit, and taxing authority of the municipality, <br />but is primarily payable from estimated or anticipated tax <br />increment. Issuance of such a bond is not subject to <br />referendum if it is reasonably estimated that at least 20% <br />of the debt service on the bonds will be paid from tax <br />increment. <br />At the time of issue, the City either (i) levys a tax <br />equal to 105% of annual debt service on the bonds and then <br />cancels all or a part of the levy if tax increment has <br />been received or (ii) estimates will be covered by tax <br />increment receipts. <br />The bonds are not subject to net debt limitations because <br />of the tax increment pledge just as if special assessments <br />were pledged for the repayment of the bonds. <br />10.8 Recommended Financing Plan <br />As was discussed earlier, due to the scale and cost of the <br />project, the City should seek maximum funding participa- <br />tion by State and Federal agencies. A major hurdle to <br />qualify for Federal AIP funds must be overcome through <br />inclusion of Gateway Industrial North into the National <br />Plan of Integrated Airports System (NPIAS). Once included <br />into the NPIAS, the airport becomes eligible for AIP <br />funds, but it must be realized that limited funds are <br />available and actual receipt of a grant offer depends on <br />funding availability and project priority. <br />10-12 <br />