Tax Increment Financing (TIF)
How Tif Works
In Missouri, TIF allows the capture of the following taxes:
- Half of the local (City and County) sales tax (1% of taxable sales in Cameron)
- All of the new (increment) property tax on real estate
Cameron officials have allowed TIF for public improvements such as streets, water, sewer, gas, electricity, stormwater control, and traffic signals as well as private improvements. TIF can also pay for building work or equipment if you are a manufacturer, distributor, packager, assembler, office, or fabricator.
TIF revenue can be captured for up to 23 years. The Cameron TIF District was established in 1994. In practice, the term depends on the funding source and amount of improvements subject to reimbursement.
The original TIF District encompassed the Crossroads Corporate Center, about 148 acres. Since then, a private 20-acre tract has been added to the south along U.S. 36.
District expansion is handled as a public process with public notices, hearings, and action by the City Council. Legal costs would be paid by the private developer or included in the TIF project costs to be paid by tax capture over time.
- Improved value: $1 million
- Estimated annual sales: $2 million
- Annual property tax capture: $19,584 ($1 million x.32 / 100 x 6.12)
- Annual sales tax capture: $20,000 ($2 million x.01)
In this example, our store would generate $39,584 in annual TIF revenue, or $910, 432 over 23 years to pay back approved improvements. Not all projects generate sales tax and caution might reduce the payback term or improvement limit.
Most of the infrastructure is already in place in the Crossroads Corporate center, so many projects may not need TIF, and the TIF Commission may choose not to capture taxes, allowing revenue to flow directly to taxing jurisdictions like schools.
Our first TIF project, Wal-Mart, allowed $2.15 million in public improvements, and the bonds were planned to be paid in 10 years. The retailer performed better than expected, and the bonds were paid in six years. So far, there are 13 projects in the district, and TIF revenue has been captured on four of them. Over a half-million dollars a year now goes directly to schools and local government from the district.