Brownfield Tax Increment Financing (TIF) is a way to use new property taxes that will be generated by the increased value of the property after redevelopment to pay for some, but not all, of the redevelopment expenses. The cost of redeveloping or restoring an old building that has contamination or major blight issues is normally higher than constructing a new building at a cornfield. So, the BRA can capture the increased property taxes and reimburse the developer for his/her redevelopment costs. The BRA can also reimburse the City for its public infrastructure improvement costs associated with a Brownfield property.
For example, if the current property tax of a blighted or a contaminated, or partially empty building in our Downtown is $1,000 per year, and the future tax of the property once redeveloped into storefronts and apartments is $4,500 per year, the BRA can “capture” the difference between current and future tax, the $3,500, and give that amount back to the party that paid for the redevelopment work. It is important to remember that the current tax of $1,000 paid by the property owner will continue going to the various taxing entities; the taxing entities do not lose any tax. Only the incremental (new) tax is used to reimburse redevelopment expenses. Once the redevelopment expenses have been reimbursed, all property taxes (current and future) go to the taxing entities for many years into the future.