At Monday’s City Council meeting, Randy Gates, the City of Norfolk’s finance officer, delivered a detailed report to citizens, the mayor and city council on the City’s past and current use of Tax Increment Financing, or TIF. State law requires such a report be presented each calendar year.
“Nebraska statutes only allow TIF for redevelopment projects that are not economically feasible without the use of TIF. This is commonly referred to as to as the ‘but for’ test. Norfolk requires the developer certify their project is not financially feasible without TIF and provide rate of return calculations, both with and without TIF, to support their ‘but for’ assertion,” said Gates.
Statutes also specify what expenditures can be paid with TIF including public infrastructure for the project. TIF can also be used for site acquisition, clearance, and preparation as well as rehabilitation of buildings in accordance with the redevelopment plan. TIF debt issued to pay for these costs is repayable only from property taxes on the increase in valuation resulting from the project. These incremental taxes can normally only go to repay the TIF debt for a maximum of 15 years. Once the TIF debt is paid or after 15 years, whichever comes first, all property taxes go to the governmental entities. Property taxes on the initial base valuation of the property prior to development continue to be paid during the entire TIF period.
The report showed that a total of 29 development projects have been issued TIF in Norfolk since 2012. Five of those projects received TIF approval in 2023. In the last six years, TIF projects have represented nearly $240 million in estimated project costs, or total investment. The total maximum TIF benefits these projects will receive is approximately $38 million, funding that is based on incremental value projections and is used primarily to pay for the costs of building public infrastructure to accommodate the development projects.
From 2018 to 2023, the housing development projects receiving TIF are projected to result in 936 new housing units in Norfolk. The report found that, on average, between 2018 and 2023, for every $1 of TIF invested into projects, the community expects to receive more than $5 in private investment return.
Among the report’s other findings is that Norfolk’s utilization of TIF is moderate compared to other cities in Nebraska. When compared to other cities its size and all other cities in Nebraska, Norfolk falls nearly in the middle, as indicated by the charts included.
A full copy of the 2023 TIF report can be found on the City’s website HERE.