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Tax Increment Financing

Category: State Incentives, Tax Incentives

Three Types of Tax Increment Financing
Tax increment financing uses the increase in property taxes generated by new development to finance qualified public improvement costs related to that development. The difference between the current property tax on a parcel of land and the estimated property tax after development is the "tax increment." Permitted uses of the tax increment vary according to the type of tax increment financing.

Three Types of TIF Districts

  • Economic Development Districts
  • Housing Districts
  • Redevelopment Districts

Eligibility Requirements
For economic development purposes, the City of Cambridge will consider using tax increment financing to write down the cost of land, utilities, roads, site preparation, rail access and other eligible economic development uses. To be eligible for TIF, a project should:

  • Create new commercial/industrial tax base
  • Effectively use community infrastructure and industrial park land
  • Redevelop underutilized industrial land or properties with rail access, or
  • Encourage private investment in properties which the City has targeted for development or redevelopment

Varied Subsidy Levels
It is not necessary for a single project to achieve all of theses goals. The degree to which it meets these goals influences the level of subsidy it can expect to attract.

Limitations on Tax Increment Financing
Tax increment financing can't be used in conjunction with the Minnesota JOBZ program because JOBZ abates the property taxes upon which tax increment financing depends.