A TIF Development Agreement: What It Is and Why It Matters

If you own or operate a business, you know how important it is to find ways to attract customers and create a desirable atmosphere for your employees. One way to do this is through a Tax Increment Financing (TIF) Development Agreement.

A TIF Development Agreement is a legal agreement between a city or municipality, a developer, and possibly a property owner. This agreement outlines the terms of how a particular development will be financed through TIF, a tool used by municipalities to promote economic development in certain areas.

TIF essentially diverts future property taxes generated by new development or improvements to an area to pay for the costs of that development. The idea is that the investment in the development will add value to the area, thereby increasing the tax base over time.

The TIF Development Agreement spells out the specifics of the TIF financing, including the amount of TIF funds being used and how they will be repaid. Repayment typically occurs over a 20-year period, during which time the developer pays back the TIF funds with the increased property taxes generated by the development.

The agreement may also address other key details, such as the scope of the development, the timeline for completion, and the responsibilities of both the developer and the municipality.

From a business standpoint, this agreement can be critical. For developers, a TIF Development Agreement provides a means to finance their projects and bring them to fruition. For municipalities, it can help to stimulate economic growth and job creation in targeted areas.

For businesses that are considering expansion or relocation, a TIF Development Agreement can be an attractive incentive to consider a particular location. The ability to finance a development through TIF can make a project more viable and help to defray the costs of construction.

However, it’s important to keep in mind that TIF Development Agreements can be complex and require careful consideration. Not all projects will qualify for TIF financing, and the terms can vary depending on the specific agreement.

If you’re considering a TIF Development Agreement, it’s a good idea to work with an experienced attorney or consultant who can help guide you through the process. With the right guidance, a TIF Development Agreement can be a valuable tool for businesses looking to grow and thrive.