TIF Explained: Created by State statute, it is the best tool that communities have for working with employers to bring jobs in. By partnering to create infrastructure that communities need to bring employers into Box Elder County.

When a Community Reinvestment Area (CRA) is put into place, property tax revenues begin to be separated into two groups: The Base and The Increment:

  • The Base is the money that is collected based on the value of properties within the boundaries of the CRA at the time the area is formed.
  • The Increment is any increase in revenues based on increased property values within the CRA from the time the district is created until it is closed. The increment is then used to reimburse a developer (or other proponent¬†for building), and creating public infrastructure that is adopted by the county/city.

After the area closes, the increased revenues are then realized by the taxing entities within that area. The following diagram shows how revenues would flow through the life of a ten-year CRA.

Tax Increment Financing Graph 1

Tax increment financing does two important things.

  • First of all, by partnering with private entities to provide critical infrastructure, the county/city is able to create many jobs.
  • Secondly, the growth we spur through tax increment financing increases the dollars that are available for regular taxing entities after the area closes, such as the Box Elder School District, Box Elder County, Bear River Water Conservancy District, Mosquito Abatement, etc.

All of these agencies benefit directly from CRA. Looking at the above graph, the dark purple represents money that funds regular taxing entities. After year ten (or whatever the life of the area may be), most of the increased revenue flows back to the taxing districts. These funds open up an option for decreased levy rates and subsequent tax burden when an area closes.

Many areas where TIF is used will see no major development for many years without this vital tool. The following graph shows how increased revenues would look for taxing districts without TIF.

Tax increment Financing Graph 2