Five years in, Connecticut’s Tax Increment Financing statute is growing up. To mark the anniversary, the Connecticut Conference of Municipalities teamed with the Connecticut Main Street Center, Inc. to host a municipal training webinar, Considering TIF? Lessons from Early Adopters on December 9, 2020.
I had the honor of being a speaker, along with longtime Camoin 310 partners Patrick McMahon from CT Main Streets and Michael Andreana at Pullman & Comley, LLC. As professionals helping communities evaluate, develop, and adopt TIF Districts and Master Plans, we opened with an overview of the impetus behind the legislation, requirements, and some practice tips.
- TIF “plays well with others” and combines with incentives like grants or Opportunity Zones.
- TIF isn’t a new tax, and doesn't raise tax rates, but be prepared to say this many times through the process as businesses and residents, as well as municipal leaders, learn about the tool.
- Understand what TIF does, and doesn’t, do, to encourage new private investment - "public and private working together" can resonate.
- Talk to your Assessor early and often – increases in real property values drive the program. Not only does your Assessor know the details of the process and calendar, but she or he is essential to the discussion of the potential value after development, which drives your revenue estimates.
I believe talk about TIF in practice was useful, but in reality we were the warm-up band for the "headliners" – leaders from municipalities using the tool, talking about their experiences and projects. Here are some takeaways for communities considering using TIF:
TIF Funds a Broad Range of Activities
Town of Windsor Locks First Selectman Chris Kervick spoke about the broad public uses TIF revenues have already funded, such as restoring an historic train station, funding a lock tender position, wayfinding and beautification, and a picnic area for the town’s canal trail. To support private investment, the town also set up a revolving loan program for small and startup business, and enables targeted Credit Enhancement Agreements (CEA) to offset developer costs and improve project viability. Recognizing the breadth of fundable projects is critical, because while hard infrastructure is often one of the first project types considered, smaller projects and support for businesses are also enabled. TIF can therefore increase project's potential to benefit a community.
Thacher Tiffany at Beacon Communities LLC discussed the Montgomery Mill project in Windsor Locks, an adaptive reuse creating 160 mixed-income apartments from an old mill. This project is an example of “TIF plays well with others” because the project included private equity and funding from low-income housing tax credits, state and federal historic tax credits, and support from the state, as well as a CEA agreement to repay a modest loan.
Integrate TIF into your Economic Development Toolkit
New Britain’s Mayor Erin Stewart shared the city’s process to add TIF to its incentives toolkit. She advised that larger, urban cities use a creative “thinking outside the box” approach to balance fiscal and tax base needs with financial assistance. As an example, Mayor Stewart pointed out that while historic tax credits are an important source of funding for urban revitalization, ground-up development is not eligible. TIF can step in and make a project more palatable.
New Britain uses TIF to fund a revolving loan program for existing and startup businesses, a lease rebate program to subsidize commercial tenants, and a code correction program to help owners upgrade their property. Again, small but valuable projects can be funded using TIF revenues when they don't qualify for other funding sources.
Laying the Groundwork Matters
Director of Planning Jonathan Reiner at the Town of Groton led with the importance of groundwork. Economic Development Strategies, zoning review and update, developer cut sheets and other marketing, all complement public and legislative outreach efforts. As fiscal pressures on communities build, incentives for private investment are coming under more scrutiny. A considered, well-supported development plan truly helps focus businesses and residents on the long term goals and can show why tools like TIF are important.
Camoin 310 has worked with the town on multiple economic development projects including the strategy and the Town of Groton Tax Increment Financing Policy, which together answer why, what, and how. We have therefore had a front-seat view of TIF in practice, from concept through planning and completion. Groton uses a TIF Policy to establish goals and parameters in advance, an approach that is particularly useful for private developers as a starting point for discussions. We worked on both of the completed TIF Districts and Master Plans and have seen firsthand how the planning and communication contribute to community acceptance.
I’ve worked on multiple TIFs in Connecticut, and its cousin District Improvement Financing in Massachusetts, and continue to be impressed by the breadth of activities and projects in our communities. December 9th was a sampler of early wins, so stay tuned.