March 2, 2019
While city councilmembers, commissioners and staff often give a brief explanation of economic development incentives when they come up during public meetings, all those acronyms can become confusing in a hurry.
Welcome to a new series from the Tribune to help members of the public better understand what these tools are and how they’re used by communities like ours.
Tax incrementing financing, or TIF, is a tool used to divert anticipated increases in tax revenue toward community projects, often public improvements.
Suppose that a developer wants to build a retail business on vacant property. In order to open the business, the existing public street needs to be extended to create access to the property, which is also expected to benefit the city. As a result of this new business, the city anticipates extra revenue in property taxes each year. The developer may come to the city to ask for a TIF, requesting that a percentage of those new tax revenues be returned to the developer to recoup their costs for the street improvements.
In Missouri, areas must be designated as blighted, as an area of conservation, or as an area of economic development (or a combination of those) in order to be eligible for TIF. The state also allows the redirection of up to 50 percent of increased tax revenue from economic activities (such as sales tax). The maximum term is 23 years.
Per Lee’s Summit’s own policy, approved incentives cannot exceed 25 percent of the total private development costs.
Proposed redevelopment plans and projects (and designation of redevelopment areas) are considered by the city’s TIF commission, who votes on whether to recommend approval to the city council. The TIF commission is made up of six residents (appointed by the mayor and approved by the council), two school board members, two members appointed by Jackson County, and one administrative liaison.
Current TIF commission members include residents Timothy Shrout, Leonard Cacchio, Clint Haynes, James Freeman, Eric Doane and Allison Burns; school board members Jackie Clark and Dennis Smith (Bob White, alternate); and Jackson County representatives Joe Hudson and Randy Rhoads.
All TIF applications must be approved by the city council.
To see the current TIF annual statement provided by the city, visit www.cityofls.net/finance-budget-taxes/tax-increment-financing-tif.