Independent public-purpose facilities or public facilities within private-sector developments

703-246-6500

• Attracts new private sector investment into blighted areas
• Promotes commerce and prosperity of citizens by providing public facilities, including but not limited to roads, water, sewer, parks and real estate devoted to open space
• Devotes the increment of new real estate taxes to a fund, with the current tax base held constant
• Supports Fairfax County tax base over the long term
• Provides tax-deductible financing with interest rates often 15 to 20 percent lower than commercial rates
• Produces significant cost savings from joint construction efforts under a public-private construction program
• Allows an affected jurisdiction to “reinvest” a portion of the net new real estate taxes back into a revitalization project
• After the public investment is amortized, the full tax benefit of the revitalization project is available to support the county tax base over the long term.

Opportunities:

• TIF financing gives a private sector master developer access to tax deductible (for federal income tax purposes) financing for the public purpose portions of a revitalization project. Interest rates on bonds that are tax deductible for the holder are often 15-to-20 percent lower than normal commercial rates
• TIF financing can be used effectively in cooperation with other public and private sector financial “packages”
• Proceeds from TIF bonds sold by a local jurisdiction are often made available directly to the private sector developer. The developer usually integrates the public facility construction within its total joint public-private project construction program with significant economies of scale – and usually with significant cost savings resulting from the joint construction effort
• The TIF district should be specifically defined to include neighboring properties that will benefit from the new public facilities. Hence, TIF financing can be used to attract new private sector investment into projects in otherwise lagging commercial centers that might otherwise continue to decline relative to the rest of the County
• TIF districts can encourage advanced developer financing for the entire infrastructure package involved in a major revitalization project – on the basis that the developer will be repaid from the TIF district as the district generates sufficient income
• Encourages a long-term vision for revitalization properties by allowing future owners/users to contribute to the up-front infrastructure requirements

Limitations:

• Tax increment financing is recorded against the total County bond debt levels outstanding. Therefore, it would be important to focus tax increment financing only in Board-approved revitalization areas where the specific projects cannot otherwise be funded from normal commercial lending sources. In brief, tax increment financing should be used to provide a competitive edge for attracting private sector investment back into older commercial centers and their adjoining neighborhoods.
• Tax increment financing cannot duplicate tax abatement projects. The County Board cannot simultaneously: (1) pledge incremental tax revenues generated by a project to pay off the TIF bond, while (2) providing tax abatement for the same project.
• Bonds supported by tax increment sources are supported by a pledge only of the revenues from the incremental increase in value of the improved property and not by the full faith and credit of the issuing locality. As a result, such bonds are often more expensive than traditional general obligation bonds.

Get More Information on Tax Incentive Financing

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Independent public-purpose facilities or public facilities within private-sector developments

703-246-6500

• Attracts new private sector investment into blighted areas
• Promotes commerce and prosperity of citizens by providing public facilities, including but not limited to roads, water, sewer, parks and real estate devoted to open space
• Devotes the increment of new real estate taxes to a fund, with the current tax base held constant
• Supports Fairfax County tax base over the long term
• Provides tax-deductible financing with interest rates often 15 to 20 percent lower than commercial rates
• Produces significant cost savings from joint construction efforts under a public-private construction program
• Allows an affected jurisdiction to “reinvest” a portion of the net new real estate taxes back into a revitalization project
• After the public investment is amortized, the full tax benefit of the revitalization project is available to support the county tax base over the long term.

Opportunities:

• TIF financing gives a private sector master developer access to tax deductible (for federal income tax purposes) financing for the public purpose portions of a revitalization project. Interest rates on bonds that are tax deductible for the holder are often 15-to-20 percent lower than normal commercial rates
• TIF financing can be used effectively in cooperation with other public and private sector financial “packages”
• Proceeds from TIF bonds sold by a local jurisdiction are often made available directly to the private sector developer. The developer usually integrates the public facility construction within its total joint public-private project construction program with significant economies of scale – and usually with significant cost savings resulting from the joint construction effort
• The TIF district should be specifically defined to include neighboring properties that will benefit from the new public facilities. Hence, TIF financing can be used to attract new private sector investment into projects in otherwise lagging commercial centers that might otherwise continue to decline relative to the rest of the County
• TIF districts can encourage advanced developer financing for the entire infrastructure package involved in a major revitalization project – on the basis that the developer will be repaid from the TIF district as the district generates sufficient income
• Encourages a long-term vision for revitalization properties by allowing future owners/users to contribute to the up-front infrastructure requirements

Limitations:

• Tax increment financing is recorded against the total County bond debt levels outstanding. Therefore, it would be important to focus tax increment financing only in Board-approved revitalization areas where the specific projects cannot otherwise be funded from normal commercial lending sources. In brief, tax increment financing should be used to provide a competitive edge for attracting private sector investment back into older commercial centers and their adjoining neighborhoods.
• Tax increment financing cannot duplicate tax abatement projects. The County Board cannot simultaneously: (1) pledge incremental tax revenues generated by a project to pay off the TIF bond, while (2) providing tax abatement for the same project.
• Bonds supported by tax increment sources are supported by a pledge only of the revenues from the incremental increase in value of the improved property and not by the full faith and credit of the issuing locality. As a result, such bonds are often more expensive than traditional general obligation bonds.

Get More Information on Tax Incentive Financing

Return to Potential Incentives Quick List

Independent public-purpose facilities or public facilities within private-sector developments

703-246-6500

• Attracts new private sector investment into blighted areas
• Promotes commerce and prosperity of citizens by providing public facilities, including but not limited to roads, water, sewer, parks and real estate devoted to open space
• Devotes the increment of new real estate taxes to a fund, with the current tax base held constant
• Supports Fairfax County tax base over the long term
• Provides tax-deductible financing with interest rates often 15 to 20 percent lower than commercial rates
• Produces significant cost savings from joint construction efforts under a public-private construction program
• Allows an affected jurisdiction to “reinvest” a portion of the net new real estate taxes back into a revitalization project
• After the public investment is amortized, the full tax benefit of the revitalization project is available to support the county tax base over the long term.

Opportunities:

• TIF financing gives a private sector master developer access to tax deductible (for federal income tax purposes) financing for the public purpose portions of a revitalization project. Interest rates on bonds that are tax deductible for the holder are often 15-to-20 percent lower than normal commercial rates
• TIF financing can be used effectively in cooperation with other public and private sector financial “packages”
• Proceeds from TIF bonds sold by a local jurisdiction are often made available directly to the private sector developer. The developer usually integrates the public facility construction within its total joint public-private project construction program with significant economies of scale – and usually with significant cost savings resulting from the joint construction effort
• The TIF district should be specifically defined to include neighboring properties that will benefit from the new public facilities. Hence, TIF financing can be used to attract new private sector investment into projects in otherwise lagging commercial centers that might otherwise continue to decline relative to the rest of the County
• TIF districts can encourage advanced developer financing for the entire infrastructure package involved in a major revitalization project – on the basis that the developer will be repaid from the TIF district as the district generates sufficient income
• Encourages a long-term vision for revitalization properties by allowing future owners/users to contribute to the up-front infrastructure requirements

Limitations:

• Tax increment financing is recorded against the total County bond debt levels outstanding. Therefore, it would be important to focus tax increment financing only in Board-approved revitalization areas where the specific projects cannot otherwise be funded from normal commercial lending sources. In brief, tax increment financing should be used to provide a competitive edge for attracting private sector investment back into older commercial centers and their adjoining neighborhoods.
• Tax increment financing cannot duplicate tax abatement projects. The County Board cannot simultaneously: (1) pledge incremental tax revenues generated by a project to pay off the TIF bond, while (2) providing tax abatement for the same project.
• Bonds supported by tax increment sources are supported by a pledge only of the revenues from the incremental increase in value of the improved property and not by the full faith and credit of the issuing locality. As a result, such bonds are often more expensive than traditional general obligation bonds.

Get More Information on Tax Incentive Financing

Return to Potential Incentives Quick List

Independent public-purpose facilities or public facilities within private-sector developments

703-246-6500

• Attracts new private sector investment into blighted areas
• Promotes commerce and prosperity of citizens by providing public facilities, including but not limited to roads, water, sewer, parks and real estate devoted to open space
• Devotes the increment of new real estate taxes to a fund, with the current tax base held constant
• Supports Fairfax County tax base over the long term
• Provides tax-deductible financing with interest rates often 15 to 20 percent lower than commercial rates
• Produces significant cost savings from joint construction efforts under a public-private construction program
• Allows an affected jurisdiction to “reinvest” a portion of the net new real estate taxes back into a revitalization project
• After the public investment is amortized, the full tax benefit of the revitalization project is available to support the county tax base over the long term.

Opportunities:

• TIF financing gives a private sector master developer access to tax deductible (for federal income tax purposes) financing for the public purpose portions of a revitalization project. Interest rates on bonds that are tax deductible for the holder are often 15-to-20 percent lower than normal commercial rates
• TIF financing can be used effectively in cooperation with other public and private sector financial “packages”
• Proceeds from TIF bonds sold by a local jurisdiction are often made available directly to the private sector developer. The developer usually integrates the public facility construction within its total joint public-private project construction program with significant economies of scale – and usually with significant cost savings resulting from the joint construction effort
• The TIF district should be specifically defined to include neighboring properties that will benefit from the new public facilities. Hence, TIF financing can be used to attract new private sector investment into projects in otherwise lagging commercial centers that might otherwise continue to decline relative to the rest of the County
• TIF districts can encourage advanced developer financing for the entire infrastructure package involved in a major revitalization project – on the basis that the developer will be repaid from the TIF district as the district generates sufficient income
• Encourages a long-term vision for revitalization properties by allowing future owners/users to contribute to the up-front infrastructure requirements

Limitations:

• Tax increment financing is recorded against the total County bond debt levels outstanding. Therefore, it would be important to focus tax increment financing only in Board-approved revitalization areas where the specific projects cannot otherwise be funded from normal commercial lending sources. In brief, tax increment financing should be used to provide a competitive edge for attracting private sector investment back into older commercial centers and their adjoining neighborhoods.
• Tax increment financing cannot duplicate tax abatement projects. The County Board cannot simultaneously: (1) pledge incremental tax revenues generated by a project to pay off the TIF bond, while (2) providing tax abatement for the same project.
• Bonds supported by tax increment sources are supported by a pledge only of the revenues from the incremental increase in value of the improved property and not by the full faith and credit of the issuing locality. As a result, such bonds are often more expensive than traditional general obligation bonds.

Get More Information on Tax Incentive Financing

Return to Potential Incentives Quick List

Independent public-purpose facilities or public facilities within private-sector developments

703-246-6500

• Attracts new private sector investment into blighted areas
• Promotes commerce and prosperity of citizens by providing public facilities, including but not limited to roads, water, sewer, parks and real estate devoted to open space
• Devotes the increment of new real estate taxes to a fund, with the current tax base held constant
• Supports Fairfax County tax base over the long term
• Provides tax-deductible financing with interest rates often 15 to 20 percent lower than commercial rates
• Produces significant cost savings from joint construction efforts under a public-private construction program
• Allows an affected jurisdiction to “reinvest” a portion of the net new real estate taxes back into a revitalization project
• After the public investment is amortized, the full tax benefit of the revitalization project is available to support the county tax base over the long term.

Opportunities:

• TIF financing gives a private sector master developer access to tax deductible (for federal income tax purposes) financing for the public purpose portions of a revitalization project. Interest rates on bonds that are tax deductible for the holder are often 15-to-20 percent lower than normal commercial rates
• TIF financing can be used effectively in cooperation with other public and private sector financial “packages”
• Proceeds from TIF bonds sold by a local jurisdiction are often made available directly to the private sector developer. The developer usually integrates the public facility construction within its total joint public-private project construction program with significant economies of scale – and usually with significant cost savings resulting from the joint construction effort
• The TIF district should be specifically defined to include neighboring properties that will benefit from the new public facilities. Hence, TIF financing can be used to attract new private sector investment into projects in otherwise lagging commercial centers that might otherwise continue to decline relative to the rest of the County
• TIF districts can encourage advanced developer financing for the entire infrastructure package involved in a major revitalization project – on the basis that the developer will be repaid from the TIF district as the district generates sufficient income
• Encourages a long-term vision for revitalization properties by allowing future owners/users to contribute to the up-front infrastructure requirements

Limitations:

• Tax increment financing is recorded against the total County bond debt levels outstanding. Therefore, it would be important to focus tax increment financing only in Board-approved revitalization areas where the specific projects cannot otherwise be funded from normal commercial lending sources. In brief, tax increment financing should be used to provide a competitive edge for attracting private sector investment back into older commercial centers and their adjoining neighborhoods.
• Tax increment financing cannot duplicate tax abatement projects. The County Board cannot simultaneously: (1) pledge incremental tax revenues generated by a project to pay off the TIF bond, while (2) providing tax abatement for the same project.
• Bonds supported by tax increment sources are supported by a pledge only of the revenues from the incremental increase in value of the improved property and not by the full faith and credit of the issuing locality. As a result, such bonds are often more expensive than traditional general obligation bonds.

Get More Information on Tax Incentive Financing

Return to Potential Incentives Quick List

Independent public-purpose facilities or public facilities within private-sector developments

Broad Street in Richmond, Virginia
• Active result: Convention Center, Marriott and more

703-246-6500

• Allows special assesments or special real estate taxes to finance public infrastructure, such as the construction of roads, streetscape improvements, parking and utilities
• Requires a petition signed by 51 percent of the area's landowners (by land area or assessed value)
• Special real estate taxes or a special assessment within the CDA can provide for services and public investment over $3 million, which is not to exceed 25 cents per hundred of assessed value unless petitioned each year by all property owners in the district
• Issues revenue bonds, including bonds with installment payment features for up to 40 years
• CDA notes stand ahead of bank financing and equity; security in bonds comes from the real estate
• The Board of Directors of the CDA would be appointed by the Board of Supervisors from among property owners in the CDA district
• . (See Appendix for a case study on the Broad Street CDA in the City of Richmond.)

Opportunities:

• CDA obligations would not be included within bonded indebtedness ceilings for Fairfax County
• Security for CDA bonds rest in the real estate itself; CDA notes also stand ahead of bank financing and equity
• The district can also commit future revenues generated by facilities owned and operated by the CDA
• Possible future use for CDAs in conjunction with tax increment financing.

Limitations:

• Uncertainty remains: i.e., The “Short Pump” legal challenge (Short Pump Town Center Community Development Authority v. Taxpayers, Henrico Co. Circuit. Court) was vacated and dismissed by the State Supreme Court on November 2, 2001. The summary of the Court’s decision says: “Because a community development authority was not authorized to bring a bond validation action under the Public Finance Act, the judgement of the circuit court invalidation of a bond issuance undertaken to finance development of a retail shopping mall is reversed, and action is dismissed.”
• The 2002 General Assembly did not take any corrective action to allow CDAs to be treated as entities or extensions of local government who would be able to seek bond validation suits.

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• Bonds issued by the Fairfax County
• Requires new bond referendum approved by county voters, which could be scheduled as early as 2006
• Lowest possible tax-free interest rate ensured because of the County's AAA credit rating for 30 years
• Necessitates documenting requests for specific revitalization projects and resulting returns on investment
• Bonds must be sold within eight years of the referendum (with a possible two-year extension) or the referendum authority lapses
• Bond resources can only be used to finance public purpose elements in a revitalization project.

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Public facilities and services

703-246-6500

• Provides funding for a broad range of public facilities and services including garbage disposal, public transportation, parking facilities, streets, bridges, community and recreation facilities, parks, playgrounds and open space
• Enables financing at tax-free interest rates
• Requires a public referendum within the sanitary district, and the bonds become the district's obligation
• Special annual taxes and access fees may be imposed for initial connection to the sanitary district and to finance the district's operating costs
• Special sanitary district indebtedness is not included in the bonded indebtedness ceilings for the County.

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Areas meeting the requirements

Norfolk and Portsmouth Virginia Enterprise Zone
• Description: From Virginia Department of Housing and Community Development

703-246-6500

• Permits special local incentives and three different types of state tax incentives. These are:
1. 10-year state income-tax credits
2. Real property tax credit of up to 30 percent for qualified zone improvements not to exceed $125,000 over five years
3. Investment tax credit for firms investing $100 million and creating 200 jobs
• Requires designation by Virginia Department of Housing and Community Development
• The General Assembly has authorized the creation of up to 60 Enterprise Zones
• Five zones, designated after 1999, must have an unemployment rate at least fifty percent higher than the statewide unemployment rate for the previous year.
• Designated state enterprise zones must meet at least one of three criteria:
  1. 25 percent or more of the population must have incomes below 80 percent of the median income for the jurisdiction ($80,872 in 2000 Census)
  2. The zone must have an unemployment rate 1.5 times the state average
  3. The area must be experiencing an office-industrial vacancy rate of at least 20 percent

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Businesses within the designated zone

703-246-6500

• Provides tax incentives and can include reductions in permit fees, user fees and gross-receipts taxes
• Within designated areas, provides regulatory flexibility, such as special zoning, permit-process reform, exemption from local ordinances and other incentives
• Spans ten years

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Qualified low-income communitities or persons

703-246-6500

• Requires creation of Community Development Entities, which are for-profit entities that provide investment capital for low-income communities or persons
• Federal tax credits spur investment in low-income communities
• Permits taxpayers to receive a credit against federal income taxes for making qualified equity investments in designated CDEs, and the investments must be used by the CDE for low-income communities
• Tax credits total 39% of the investment cost and is claimed over a seven-year credit-allowance period
• Allows for partnerships with national community development lenders that reduce burdens on local government
• Allows for partnerships with national community development lenders that reduces local government administrative burdens
• Go to the CDFI Fund Web Site by the Department of Treasury

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