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Tax increment financing is a tool for local economic development that authorizes a TIFA to capture a portion of the property taxes levied by other taxing units (the City, County, WCCC, HCMA, Wayne RESA, etc.) and use those revenues for economic development purposes.
Basically, once a tax increment financing plan has been approved by the City Council, the property values of the properties covered by the tax increment financing plan are, in effect, frozen for the other taxing units. The other taxing units continue to receive the same amount of tax revenues from those properties for the life of the TIFA Plan. The tax revenues received from those properties in future years which are in excess of the tax revenues on the base value are turned over to the TIFA in order to further implement the projects in the TIFA Plan. Thus, the TIFA gets to capture the incremental increase in the property tax revenues over the amount of revenues in the base year.
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The TIFA is a municipal corporation created by the City of Romulus under Public Act 430 of 1980, as amended, to encourage economic development, neighborhood revitalization and historic preservation in certain development areas in the City. The TIFA is governed by a Board of 13 people appointed by the Mayor and approved by the City Council. The Board members serve 4 year staggered terms.
The TIFA is authorized to plan and propose the construction, renovation, repair, and improvements to public facilities in the development area. The TIFA does this through a Development Plan and Tax Increment Finance Plan that is approved by the TIFA Board and the City Council. The TIFA Plans sets forth the different types of activities and public facilities that the TIFA intends to pay for over the life of the Plan, which is usually 20 to 30 years.
The types of public facilities the TIFA can construct include a street, plaza, or pedestrian mall, and any improvements to a street, plaza, boulevard, alley or pedestrian mall, including street furniture and beautification, park, parking facility, recreation facility, playground, school, library, public institution or administration building, right-of-way, structure, waterway, bridge, lake, pond, canal, utility line or pipeline, and other similar facilities and necessary easements of these facilities designated and dedicated to use by the public generally or used by a public agency.
The TIFA uses a tool called tax increment financing to generate revenues to pay for public improvements. Tax increment financing is used by several different kinds of municipal authorities, including Downtown Development Authorities (DDAs), Local Development Finance Authorities (LDFAs), and Brownfield Redevelopment Authorities (BRAs). The TIFA can pay for projects each year as it collects revenues to pay for the projects, or it can issue bonds and use the tax increment revenues to pay back the principal and interest on the bonds.
No. The TIFA does not have the power to tax. It can only capture certain tax revenues from other taxing units.
No. Property owners in the TIFA are assessed and taxed in the same manner and at the same tax rates as any other property owner in the City. The difference is where the property tax revenues go (i.e. to the TIFA or the different taxing units) not how much is paid by the property owner.
No. The TIFA works with the City to implement its projects and plans. The TIFA Plan must be approved by City Council. The TIFAs annual budgets must be approved by City Council. In certain cases, the TIFA must also get City Council approval to borrow money.
Yes. There are over 100 TIFAs in Michigan and over 300 DDAs. TIFAs and Downtown Development Authorities (DDA) have been used to pay for all kinds of public improvements across the State, ranging from street and sidewalk improvements, water and sewer lines and street lighting to recreation centers, golf courses and stadiums.