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Tax Abatements
Tax abatements enhance cash flow on projects by reducing expenses through abatement of
local property taxes for a specified time.
Criteria
- Tax abatement is often available in an area designated as blighted, such as an urban
renewal district or an enterprise zone.
Uses
- This program is generally offered as a tool to promote new construction or
rehabilitation.
Structure
- The property tax on improvements to private development projects is "forgiven"
or abated up to 100 percent by local government.
- The length of time of the tax abatement usually ranges from 10 to 25 years.
- Property tax paid to the local taxing authority during the abatement period is based on
the property's assessed value before the project's expansion.
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Tax Increment Financing
Tax increment financing (TIF) is authorized by some states as a tool for using a
portion of the increase in taxes generated by a new project to help finance
project-related costs.
Criteria
- Criteria and eligibility vary from state to state.
- State statutes usually require a TIF project area to be designated as a blighted area or
an enterprise zone.
- Redevelopment plans using TIF often must be submitted to all affected local tax
jurisdictions and usually to a TIF commission. Jurisdictions such as a county commission
or a local school board may have the power to veto the use of tax increment financing if
they find it will adversely affect their operations.
Uses
- Tax increment financing bonds can be used to purchase a site, construct a building, fund
demolition or rehabilitation of an existing building, and for other permitted uses.
Contact
State Housing or Economic Development Office
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