With Sturgeon Bay in the middle of the process to determine whether a TIF district should be created as part of the west waterfront redevelopment project, we sat down with City Administrator Steve McNeil to find out more about TIFs and how they work.
McNeil first explained the difference between TIF (Tax Incremental Financing) -- the actual financing mechanism -- and a TID (Tax Increment District), which refers to the actual plot of land being targeted.
Then he got into the nuts and bolts of how it works.
To be eligible for a TIF, McNeil says projects need to pass the "but for" test. As in "but for" the tax incremental financing this project won't happen.
"There has to be a clear determination made that in the absence of this type of financing the project won't advance," says McNeil. "That's critical."
McNeil says one of the misconceptions about TIDs is that the property owner doesn't have to pay property taxes while the TID is in place.
"The property owner pays exactly the same taxes as everybody else in town does," says McNeil. "What happens is a portion of those (taxes) once they get to the city are used for another purpose but they make tax payments just like everyone else."
He says another point of confusion relates to how the "increment" may be used.
On our next installment we'll get an update from McNeil on where the city stands on the creation of TID No. 4 -- what's been done so far and what's next in the process.