Historical February–March 2005 article. Dates, prices, services and contacts describe the source period; current availability has not been established.
Many people have heard of Tax Increment Financing, or “TIF,” a form of public financing for real estate projects.
As they have become more prevalent in St. Louis, TIFs have sparked controversy, with some claiming that they misuse public funds and should be restricted.
But done right, TIFs can be effective tools for revitalization. What is a TIF and how does it work?
The basic idea of TIF is simple – within a defined area, taxes are “frozen” at a base amount for a number of years.
During this time, any new taxes generated by development activity (also known as “tax increment”) are collected in an account and used to support the cost of the development.
In Missouri, TIFs can run for up to 23 years and collect both the property tax increment as well as 50% of the activity tax increment (activity taxes include sales, restaurant, payroll and income taxes).
The remaining 50% of activity taxes go back to the taxing districts TIFs were created to assist projects that would be infeasible “but for” the value of the TIF. Since projects can capture up to 23 years of tax revenue, TIF is generally worth more than traditional 10-year tax abatement, thus is attractive for larger projects where there is a financing gap that must be closed to make the project work.
Another important aspect of TIF is that it can be used for financing.
In other words, the developer can take a loan against the project’s projected tax revenues.
A bank finances the loan, backed by the guarantee of a TIF note.
As the completed project generates tax revenues, they are collected to pay back the loan (with interest, of course). Due to the costs associated with setting up a TIF, they generally make sense for projects with budgets of several million dollars or more.
A developer, public or private, who wishes to apply for a TIF must go through the City’s TIF Commission, which then makes a recommendation to the Board of Aldermen for authorization. TIFs in St. Louis are not without controversy.
In the early 1990’s the City backed a TIF loan for a shopping center with a pledge of general revenues.
If the center doesn’t generate the taxes it projected, the City is must pay back the loan. Fortunately, the City no longer backs TIFs with its own funds – only the developer is on the hook for the loan repayment. TIFs have also generated controversy for their use in the outer suburbs of St. Louis.
According to state law, TIFs can only be used in “blighted” areas, but blight has been broadly interpreted to include almost any under-developed property, even farms.
In contrast, City TIFs have helped spur reinvestment and revitalization of the region’s core. Currently there are over 50 TIFs in place in St. Louis, worth nearly $250,000,000.
These TIFs have leveraged over $1.4 Billion in private investment. That’s nearly $6 leveraged for every $1 of TIF investment.
The Delmar Commercial Committee has been researching and exploring the possibility of a TIF District to develop muchneeded parking in the area from the City Limits east to DeBaliviere.
If a TIF is worked out, it could also support larger and more difficult private development projects and sites, as well as districtwide improvement projects like parking. Look for more news to come as the research continues.
If you have any questions, you may contact Jo Ann Vatcha at
Originally published in The Times of Skinker-DeBaliviere, February–March 2005.
Read this article in the original newspaper issue.
Archival transcription note: Final sentence ends contact JoAnn Vatcha at with no number printed. No contact detail supplied from adjacent North Campus article.
Original source: SD_Times2005_02.pdf, printed page(s) 4; PDF page(s) 4.
