TIFs, TDDs and CIDs — a primer

Panelists in a Wednesday night forum will discuss the merits of tax increment financing, transportation development districts and community improvement districts. A preview is in tomorrow’s Missourian.

The forum is at 7 p.m. in the Friends Room of the Columbia Public Library.

Here’s a primer on these arrangements.

Tax Increment Financing

This tax incentive allows developers to take increases in property taxes generated by improvements and funnel them back into the project. Essentially, the valuation of the property is frozen, so any “new” tax money resulting from improvements is put into a fund and given to the developer. A portion of the increase in city sales and utility taxes resulting from the project also goes back into the construction. The arrangement can last as long as 23 years.

To qualify, developers must demonstrate that the project could not be completed without the use of tax increment financing. The project must also eliminate blight, conserve an important property or boost an identified economic development area.

Transportation Development Districts

This arrangement allows developers to establish a district that can charge up to a 1 percent retail sales tax, establish tolls and levy property taxes or special assessments within its boundaries. Money generated from those assessments must be used to pay for transportation-related projects like roads, bridges or interchanges. They are officially public bodies governed by a board of directors, and they’re established by filing a petition in the circuit court of the county in which it is located. Generally, a majority of registered voters residing in the district must sign the petition. If there are no registered voters living in the district, a majority of property owners (even if there is only one) within the district must sign the petition.

Missourian reporters took a hard look at Columbia’s transportation development districts earlier this year. See their findings here.

Community Improvement Districts

These can be either a public body or not-for-profit corporation established to collect money from business licenses, property taxes, sales taxes or user fees within a particular geographic district. That money is used to provide services within the district, including (but not limited to) maintenance, marketing and capital improvements. The district is governed by a board of directors.

Community improvement districts are established by a petition among property owners. The CID must recieve the approval of both a majority of property owners and a majority in a petition where each landowner’s vote is proportional to the amount of land they own. Registered voters residing in the district must approve taxes and fees collected by the district.