Tax Increment Financing (TIF)
- An economic development strategy for assisting economically distressed or blighted areas of a municipality.
- Aids in developing where it would not occur solely through private investment within the reasonably foreseeable future.
- Local governments can use tax increment financing to publicly finance needed structural improvements and enhanced infrastructure within a defined area.
- The goal is to promote the viability of existing businesses and to attract new commercial enterprises to the area.
How Is It Used?
Tax increments are simply the increase of property tax revenues over and above a base value established by the municipality in the base year. The purpose of TIF is to facilitate development or redevelopment of an economically disadvantaged area. This is done through the use of the tax increment funds generated by the zone and used for public improvements and to assist private initiatives in the zone. These improvements enhance the value of real property located within the zone
Examples of Use
- A developer may pay the cost of approved public improvements associated with a private development and be reimbursed over time from the increment associated with the development of the area.
- Public improvements may be paid for directly with increment funds to encourage further development in the zone.
- Public improvements may be funded by the sale of bonds that will be repaid over time out of tax increments.
TIF Reinvestment Zones
Waco has three zones established for tax increment financing (see map(PDF, 556KB)):
- Reinvestment Zone Number One for Tax Increment Financing (TIF Zone #1):
- West of the river, the zone extends from Gurley Lane up to Lake Shore Drive. East of the river, the zone extends from Chapel Hill to Waco Drive, and from Herring Avenue to the confluence of the Bosque and Brazos Rivers. The zone, which was established in 1982 in anticipation of mixed-use development along the Brazos River expires in 2032.
- Reinvestment Zone Number Two for Tax Increment Financing (TIF Zone #2):
- Established in 1983 at the request of a developer, this zone is bounded by the Brazos River and MLK Jr. Boulevard on the east and west, and Waco Drive and Herring Avenue on the north and south. The zone will expire in 2023.
- Reinvestment Zone Number Three for Tax Increment Financing (TIF Zone #3):
- Bounded by the Bosque River, Lake Shore Drive and North 19th Street, this zone, which was established in 1986 at the request of a developer in anticipation of a mixed-use development project will expire in 2026.
TIF funds may be used for the following improvements:
- the installation of public works and public improvements
- utilities, water and sewer facilities, flood and drainage facilities;
- railroad or transit facilities;
- streets and streetlights;
- affordable housing;
- the remediation of conditions that contaminate public or private land or buildings;
- the preservation of the façade of a private or public building; or
- the demolition of a public or private building;
- professional service costs incurred for architectural, planning, engineering services;
- public projects – including the cost of buildings, schools or other educational facilities owned by or on behalf of a school district, community college district or other political subdivision of the state
- Please be aware that an improvement that may be eligible per State law may not be provided TIF funds per discretion of the TIF Board, and/or City Council.
TIF projects that received funds for public improvements:
Facade Improvement Grant Program (Throughout TIF Zone One): is a special program designed to assist smaller projects with a grant of $500 up to $45,000 (10% - 50% of the total project cost) to restore, stabilize, repair and significantly improve the appearance of a dilapidated building within TIF Zone One.
- Magnolia Market Building Renovation (601 Webster Ave.@ the Silos: an old 16,480 sq. ft. grain mill was renovated into a retail space with a large adjoining warehouse for Magnolia Market. The small 2,000 sq. ft. building at 6th & Webster was renovated into a bakery.
- Mary Ave. Market Building Renovation (300 S. 6th St.): a 10,944 sq. ft. historically contributing warehouse built in 1948 was renovated on the interior and the exterior of the building to create a retail space that can accommodate up to 5 - 6 different vendors.
- West Campus Lofts, Phase II (805 So. 8th St.) the original South Waco Elementary School which is on Waco’s historic register and was designed by renowned local architect, Milton Scott in 1922 has been re-purposed with the installation of 32 loft apartments with 52 bedrooms, a 300 sq. ft. office area, and the original 17 feet wide corridors have been maintained.
- Brazos Promenade, Phases I- III (Riverfront & University Parks Dr.) this major mixed-use project on the Riverfront will include hotels, multi-family residences, restaurants, offices, entertainment venues, the Farmer’s Market and a parking garage with public parking.
The following questions are provided to help potential applicants determine project eligibility:
Does the project:
a. benefit the general public?
b. create a positive economic impact in the zone?
c. increase property value?
d. create jobs?
e. revitalize vacant land or structures?
f. have other sources of support?
Is he project consistent with:
a. TIF Goals and Objectives?
b. The City of Waco's Comprehensive Plan?
c. Imagine Waco Plan?
Depending on location, is the project consistent with the:
a. Downtown Overlay Zone?
b. Brazos Corridor Overlay Zone?
c. University Overlay Zone?
Structure & Process:
The TIF board consists of eight members. The Waco City Council appoints 5 board members, and the three participating taxing entities (McLennan County, Waco Independent School District, McLennan Community College) each appoint a board member. The TIF board recommends the development of project and financing plans and serves in an advisory capacity to the City Council concerning development activity and expenditure of increment funds in each of the three zones.
Potential applicants are encouraged to contact Economic Development Staff and arrange a meeting (254-750-5640) to ascertain whether the public improvements associated with the proposed project may be eligible for TIF funding. TIF funding requests will be presented to the TIF board with a recommendation from staff and City Center Waco. After the TIF Board votes on the item it will go to the City Council for consideration. Two City Council meetings are required to approve (or disapprove) the funding of a project. If the project is approved by City Council, the City of Waco will enter into a contract for the reimbursement of the amount of TIF-eligible work approved by City Council.
All contractor(s) doing the work on the project must secure appropriate permits, insurance and bonding before any work is done. All completed work must be certified in compliance with applicable City codes and construction standards prior to any TIF funds being reimbursed.
NOTICE: Please set aside time to discuss your project plans with Economic Development staff (254) 750-5640) PRIOR to any work being done on the project to determine what items may be considered eligible for TIF funding, and to assist you through the application process.