Virginia law: Article 4.1, Sections 58.1.3245 to
58.1.3245.5
Virginia cities, towns and counties
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.
Virginia law: Article 4.1, Sections 58.1.3245 to
58.1.3245.5
Virginia cities, towns and counties
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.
Virginia law: Article 4.1, Sections 58.1.3245 to
58.1.3245.5
Virginia cities, towns and counties
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.
Virginia law: Article 4.1, Sections 58.1.3245 to
58.1.3245.5
Virginia cities, towns and counties
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.
Virginia law: Article 4.1, Sections 58.1.3245 to
58.1.3245.5
Virginia cities, towns and counties
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.
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.
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.
Permits
special local incentives and three different types of state tax
incentives. These are:
10-year state income-tax credits
Real property
tax credit
of up to 30 percent for qualified zone improvements
not to exceed $125,000
over
five years
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:
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)
The zone must have an unemployment
rate 1.5 times the state average
The area must be
experiencing an office-industrial vacancy rate of at least 20 percent
Public entities, chambers of commerce or industrial development authorities
Financial
Virginia code: Article 4.2, Sections 58.1-3245.6 to
58.1-3245.11
Counties, cities and towns
703-246-6500
Uses funds allocated
by a specific percentage of the increase in commercial and residential
real estate taxes
Provides grants to industrial development authorities
to promote economic development, chambers of commerce or similar groups
or to provide enhanced
law enforcement or public services
Earmarks money specifically for economic
development
Allow counties,
cities and towns to adopt local enterprise zone development taxation
programs through which a specified
percentage of the increase in commercial and residential real estate
taxes or taxes on machinery and tools may be allocated by the jurisdiction
to a Zone Development Fund.
Tax increment can be used to:
Enhance law enforcement
or other public services
Make grants to chambers of
commerce or
similar
groups
to promote economic development
Make grants
to industrial development authorities to promote economic development
for the
enterprise zone.
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
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
Community
Development Authorities