Tax-Increment Financing (TIF)
In October, the city council set Tax-Increment Financing (TIF) district Number 5 boundary around Jackson Boulevard, extending a full block to Kansas and Illinois streets in either direction along Jackson Boulevard, from Exit 12 to University Street. The TIF district was proposed to finance amenities above and beyond the roadway, water, and sewer improvements planned for the reconstruction project, such as
- Enhanced sidewalks
- Street furniture things that are not essential but affect the aesthetics
- Such as the past Main Street reconstruction project that added the clock tower and fireplace at the corner of Hudson and Main streets
Economic Development Tool
A TIF district is an economic development tool used to encourage development in an area.
It is a public financing system that uses future increases in property tax to reimburse the costs of public improvements built within a designated TIF district boundary. As real estate value increases within that boundary area, higher tax revenues result. That “tax increment” is then used to refund the costs of public improvements created to support the project, paid back to the source, which in this case would be the city of Spearfish.
Setting the boundary is one part of creating a TIF district. The next step is for a project plan to be created that describes the improvements to be paid for by the TIF district, their locations, and cost. The plan also presents a statistical assessment of the financial impact to the various taxing entities, including the city, county, and school district, and the project plan is then submitted for review. It is shared with the county and school district, who offer their input, and then the plan must go through the planning commission and city council for approval before the TIF district is created.