A Brief Introduction to Tax Increment Financing

(To use the database, just click on the county you want to examine, then click on the city and then on a developer.)

Tax Increment Financing (TIF) is one of those dry, abstract governmental issues that has powerful effects on how we live. TIF was originally conceived to promote economic development in marginalized areas. Recently, it has been used primarily to build higher income apartments and condos.

Tax Increment Financing gives money back to developers for projects that the City deems worthwhile. This is a very useful tool the City can use to support the development of projects like low-income housing, homeless shelters, drug rehabilitation clinics, etc., that might not otherwise get built. Unfortunately, with the passage of time, TIF has mutated into more of an automatic perk for real estate developers looking to build upscale apartments and luxury condos. And, it’s a perk that comes, at least partly, out of your pocket. The way it works is that the City returns most of the property taxes developers pay on new developments for a period of up to 15 years (in the graphs, the red part of the column represents how much property tax gets returned to the developer - taxes refunded. The green part is how much the developer ends up paying after getting the refund/subsidy).

For example, you may think that your property taxes are going up because the city is broke. That's not quite true. But you are paying property taxes so real estate developers don't have to.

With Nebraska TIF, the developer pays the full taxes on the improved property to the city. However, the taxes on the increment (the improvements) are diverted from public coffers.

Different jurisdictions do this differently. In Lincoln’s case the tax increment money is used to pay off a 15-year City bond that paid for parts of the TIF redevelopment. In Omaha's case, the City simply declares that it (the City) owes the developer the estimated amount of the increment over 15 years and annually refunds the taxes on the increment to the developer until the estimated increment amount is paid.

The end result is the same – money that otherwise would go to schools and other public services is diverted to a developer. Each new TIF project requires city services (police, fire, sewage processing, schools), but the TIF project does not pay for them, you do.

The way that land is used and the economic development policies that accompany that land use determine the kind of city we live in. Both affect the health and wellbeing of the community. We believe in land use planning and economic development that build social cohesion and includes all voices, especially those of marginalized and disadvantaged people.

The contentious issues with how TIF policy is used include gentrification, relocating (rather than reducing) poverty, using public funds for private gain, governmental accountability and transparency among others. That's why it's important to have information easily available for citizens to review and reach informed opinions.

As you can see, issues around TIF and other land use and economic development policies are local, directly affecting us all. In turn, we can directly affect them – but only if we organize, work with each other and make a commitment to include everyone in the decision-making process; no more decisions about us without us. This starts a small pebble rolling that can build into an irresistible force affecting city, state and national trends.

On this website you can begin to get a sense of how much money is donated to developers by cities and counties across the state. A certain portion of these TIF-related tax expenditures are worthwhile. Many of them are not. Look them over yourself and decide.

For more information on this topic, check out the reports issued by Policy Research & Innovation in 2011 and 2012. Or email us (office@prineb.org) and we can come talk to your organization.

The data on this website comes from the Nebraska Department of Revenue TIF Annual Reports.

This website is an open source project of Open/Nebraska and Policy Research & Innovation. You can contribute to it and report problems on github.