Ever heard of Tax Increment Financing (TIF)? No, me neither, until the second assignment of my housing course at De Montfort University last year! Whilst anything with the word tax in the title is immediately off-putting and yawn-inducing, this assignment was a prime example of how CIH qualifications broaden your horizons and understanding and helps you become a better housing professional.
In a nutshell, TIF is a mechanism developed in the US to finance new infrastructure to bring forward regeneration projects. It’s a way to pay for growth with growth, that is, local authorities borrow money for infrastructure projects against the anticipated future growth in business rates income arising from the said infrastructure and regeneration projects.
TIF is mainly suitable for projects where a lack of infrastructure is the primary barrier to growth, where there is sufficient demand from the private sector, scope to increase business tax revenues and where other sources of finance are unavailable.
In the UK, TIF has been discussed as a funding source for housing and regeneration since the 1990s, for example Greg Clarke MP advocated the use of TIF schemes in 1999 in a Guardian article and again in 2011 at the Conservative Party Conference. Finally in 2011, the government set out the framework for TIF in England in the Local Government Finance Bill, which received Royal Assent in 2012. Scotland have been the first to make any progress and have approved a number of schemes.
When I completed the assignment in December 2012, a bidding round for TIF proposals in England was anticipated in the near future, however, to my knowledge (a quick Google search!) I can’t see that this has happened yet.
However, if you’re wondering what a TIF project might look like, I’ve copied below the project proposal summary from my assignment:
It is proposed that AVBC leads a partnership made up of the local housing association, county council, community groups and local enterprise partnership to bid for TIF 2 funding to finance a regeneration project in Heanor.
Is it proposed that this funding is used to address infrastructure issues identified in 2 recent reports which are barriers to growth and which will unlock private investment, for example:
- Improve public transport network, pedestrian links and educational infrastructure to enable residential development
- Encourage new market ideas to increase use of town centre, e.g. farmers and antiques markets
- Develop a youth centre, perhaps in a vacant shop unit
- Improve accessibility to town centre for pedestrians
- Improve car parking and signage
- Improvements to green spaces to increase use, e.g. bandstand, amphitheatre, eco area
- Increase evening leisure offer, e.g. community cinema or theatre
- Support refurbishment of derelict commercial and residential units in town centre
By implementing the above improvements, AVBC will create a town centre that is attractive to private investors such as residential, commercial and leisure developers. For example, the project would immediately ensure the viability of two sites which could provide 4,795 residential dwellings.
Further, the proposed TIF scheme supports local, regional and national regeneration priorities and will achieve a variety of social, economic, physical and environmental benefits as well as a sustainable transformation and improvement of Heanor
Thanks for reading :)