Tax Increment Financing (TIF) Information

What is a TIF?

A TIF, or Tax Increment Financing district, is a special district established by the municipality in a specific area of the community, that provides specific funding for the targeted area to fund infrastructure improvements.  In return, these infrastructure improvements (such as roads, water and sewer) serve as the spur to additional development, which generates tax dollars.  These tax dollars are used to pay  off the cost of the improvements directly.  

How does a TIF work?

The first component is establishing a current baseline of assessed value within the district before any new development occurs. The taxable valuation of the district is tabulated at the time of its creation, referred to as the original taxable value (OTV) or simply “base.”  After defining the TIF district, the current assessed values and property tax revenues are “frozen” and continue to flow to the Town’s general fund.

The second component is the incremental or increased property tax revenue based on the difference between the original taxable value (OTV) and the new current assessed value of the new or redeveloped properties.  This is known as the captured assessed value.  All or a portion of this new revenue is used to pay for the infrastructure improvements (sewer, water, roads, etc.) that enabled the development within the district.   

The municipality determines what percentage of new assessed value the district will retain. Currently, all three of the City of Rochester’s Tax Incremental Financing Districts retain 100% of assessed value increases. The retained tax revenues generated within the district can now be used to fund new public infrastructure, related maintenance expenses, additional land or property acquisitions, or used to be pay related bonded debt service.  The retained assessed values and related tax revenues are held in a special fund and segregated from the general fund. The revenues held in these special funds are referred to as “retained revenues.” The general taxpayer is not burdened with these expenses. 

It’s important to note that all properties within the district are still subject to full property taxation. It’s only the portion above the baseline created from new development, or other factors that increase assessed values, that are allowed to be retained by the district.

The duration of a TIF district is typically limited by the time required to amortize bonded debt and the recovery of other municipal costs incurred in creating the TIF district and provide public infrastructure.  Once the improvements are paid for 100% of the property taxes generated in the District go to the Town’s general fund.

What are public infrastructure improvements?

Public infrastructure investments typically include water supply, sewer expansion and repair, storm water drainage, street and sidewalk construction, street lighting, park improvements, and parking structures.  

What are the benefits of a TIF?

Establishment of a TIF district benefits residents, businesses, and the municipality.

For residents: A TIF can encourage desired commercial development in specific areas of the community where it is wanted and needed and would not otherwise occur on a timely basis. The improvements needed to stimulate tax base expansion are offset by that expansion at basically no cost to the other taxpayers.

Once the public improvements in the district have been paid for, the increased tax revenue generated by the new development becomes part of the Town’s general revenue.

For Businesses: A TIF can provide an attractive and viable mechanism to pay for the public improvements necessary to support desired business development, expansion, or renovation in specific areas desirable to the Town. Without access to these public improvements, an otherwise desirable business may choose to locate or expand in another community resulting in lost tax base, jobs, and economic vitality. Businesses want to locate in a “town with a plan.”

For the municipality: The original assessed value of the property in the TIF district remains included in net assessed valuations that are used to set the tax rate and those revenues go to the general fund.  Revenue generated by the TIF enable the municipality to make infrastructure improvements without cost to other taxpayers.  Ultimately, once the TIF is completed and closed, the retained assessed value revenue goes to the general fund, which can lower the tax rate.

Where are the TIF districts in Rochester?

Granite State Business Park:  The Granite State Business Park (GSBP) is located in the southeastern portion of Rochester adjacent to the Skyhaven Airport.  It is home to high tech, advanced manufacturing and medical device applications, including innovative products for the aerospace, health, auto and defense industries.

Granite State Business Park

Granite Ridge Development District:  The Granite Ridge Development District encompasses over 150 acres of development potential along Route 11, including The Ridge Marketplace, featuring a diverse mix of retail, service and restaurants.

The Ridge

Rochester Housing Authority – Business Finance Authority (RHA-BFA SAFRAN Lease):  The Former Kline Property TIF includes 85 Innovation Drive in the back of the Granite State Business Park (GSBP) TIF, located in the southeastern portion of Rochester adjacent to the Skyhaven Airport.

Construction - Safran

Where can I find more information?