Tax Allocation District
Encyclopedia
A tax-allocation district (TAD), also known as tax increment financing
, is a defined area where real estate
property tax
monies gathered above a certain threshold for a certain period of time (typically 25 years) to be used a specified improvement. The funds raised from a TAD are placed in a tax
-free bond (finance)
where the money can continue to grow. These improvements are typically for revitalization and especially to complete redevelopment
efforts.
Enactment of a TAD typically requires approval of all local government
s who will be giving-up taxes, thus a project within a municipality
will also require approval of the county's commission
(or its local equivalent), and the board of the school district
, in addition to the city council
and possibly township
board of supervisors (if applicable).
This differs from an improvement district
, which the property owners agree to pay extra for improvements. That is only an option for an area which is already in good economic health.
Tax increment financing
Tax Increment Financing, or TIF, is a public financing method which has been used as a subsidy for redevelopment and community improvement projects in many countries including the United States for more than 50 years...
, is a defined area where real estate
Real estate
In general use, esp. North American, 'real estate' is taken to mean "Property consisting of land and the buildings on it, along with its natural resources such as crops, minerals, or water; immovable property of this nature; an interest vested in this; an item of real property; buildings or...
property tax
Property tax
A property tax is an ad valorem levy on the value of property that the owner is required to pay. The tax is levied by the governing authority of the jurisdiction in which the property is located; it may be paid to a national government, a federated state or a municipality...
monies gathered above a certain threshold for a certain period of time (typically 25 years) to be used a specified improvement. The funds raised from a TAD are placed in a tax
Tax
To tax is to impose a financial charge or other levy upon a taxpayer by a state or the functional equivalent of a state such that failure to pay is punishable by law. Taxes are also imposed by many subnational entities...
-free bond (finance)
Bond (finance)
In finance, a bond is a debt security, in which the authorized issuer owes the holders a debt and, depending on the terms of the bond, is obliged to pay interest to use and/or to repay the principal at a later date, termed maturity...
where the money can continue to grow. These improvements are typically for revitalization and especially to complete redevelopment
Redevelopment
Redevelopment is any new construction on a site that has pre-existing uses.-Description:Variations on redevelopment include:* Urban infill on vacant parcels that have no existing activity but were previously developed, especially on Brownfield land, such as the redevelopment of an industrial site...
efforts.
Enactment of a TAD typically requires approval of all local government
Local government
Local government refers collectively to administrative authorities over areas that are smaller than a state.The term is used to contrast with offices at nation-state level, which are referred to as the central government, national government, or federal government...
s who will be giving-up taxes, thus a project within a municipality
Municipality
A municipality is essentially an urban administrative division having corporate status and usually powers of self-government. It can also be used to mean the governing body of a municipality. A municipality is a general-purpose administrative subdivision, as opposed to a special-purpose district...
will also require approval of the county's commission
County commission
A county commission is a group of elected officials charged with administering the county government in local government in some states of the United States. County commissions are usually made up of three or more individuals...
(or its local equivalent), and the board of the school district
School district
School districts are a form of special-purpose district which serves to operate the local public primary and secondary schools.-United States:...
, in addition to the city council
City council
A city council or town council is the legislative body that governs a city, town, municipality or local government area.-Australia & NZ:Because of the differences in legislation between the States, the exact definition of a City Council varies...
and possibly township
Township
The word township is used to refer to different kinds of settlements in different countries. Township is generally associated with an urban area. However there are many exceptions to this rule. In Australia, the United States, and Canada, they may be settlements too small to be considered urban...
board of supervisors (if applicable).
This differs from an improvement district
Improvement district
Improvement district can refer to:*Business improvement district, a type of urban zoning*improvement district, a type of rural municipality in Alberta...
, which the property owners agree to pay extra for improvements. That is only an option for an area which is already in good economic health.
Examples
- In the U.S. state of GeorgiaGeorgia (U.S. state)Georgia is a state located in the southeastern United States. It was established in 1732, the last of the original Thirteen Colonies. The state is named after King George II of Great Britain. Georgia was the fourth state to ratify the United States Constitution, on January 2, 1788...
, TAD legislationLegislationLegislation is law which has been promulgated by a legislature or other governing body, or the process of making it...
was created in 1985 and is described in the OCGAOCGAOCGA may refer to:*Official Code of Georgia Annotated*Ontario Charitable Gaming Association...
section 36-44-5.