After the filing of the certificate with the VIEDA, the VIEDA shall prepare or cause to be prepared a tax increment development plan for the TIF area after review of the proposed provisions of the plan by the agencies or departments, as the VIEDA considers appropriate. After preparation of the tax increment development plan, the VIEDA shall submit the plan to the Governor.

TIF bonds are tax increment financing bonds, notes or other obligations issued by the PFA. The PFA may issue TIF bonds to finance development costs of eligible TIF projects. TIF bonds may not be issued in an amount exceeding the total costs of implementing the TIF plan.

Neither the full faith and credit nor the taxing power of the V.I. Government, other than property tax increment revenues, gross receipts tax increment revenues may be pledged to secure the payment of any TIF bonds issues.

TIF used to finance a variety of costs and improvements pertaining to public infrastructure, land acquisition, demolition, utilities including such things as sewer expansion and repair, water supply, street construction, affordable/low income housing, libraries, schools, traffic control, park improvements, parking structure, utility lines.

The funds allocated to and deposited into the tax increment trust fund are used to:

• Pay administrative, overhead expenses or incidentals to carry out tax increment development plan
• To pay for redevelopment planning, surveys, and financial analysis
• Reimburse VIEDA for expenses incurred prior to adoption of plan
• Purchase real property of TIF area
• Clear and prepare redevelopment and relocation of site occupant
• Pay principal, interest and any premium on TIF bonds
• Pay all expenses incidental to or connected with the issuance, sale, redemption or purchase of TIF bonds

The VIEDA establishes for each TIF area a tax increment trust fund. Funds allocated to and deposited into the fund must be made available to the VIEDA and the PFA, as security or otherwise, to finance or refinance any eligible project or TIF bond the VIEDA undertakes pursuant to the approved tax increment development plan.

Monies from TIF area are deposited into a tax increment trust fund established for a TIF area.

Deposited funds are used to finance or refinance any eligible project or TIF bond.

To be eligible for TIF, the development sponsor will apply to the VIEDA for certification that the project complies with the requirements for TIF. The application will consist of a preliminary development plan for the project which must meet certain criteria. If the VIEDA certifies the project for final approval by the Legislature following a public hearing, the VIEDA will enter into negotiations with the development sponsor. When a project is certified by the VIEDA, the VIEDA will determine the date to be set for the initial assessed valuation.

• Developer applies to the VIEDA for certification to perform TIF project.
• Application must be supported by TIF project’s preliminary development plan. Required contents of the plan listed in the Virgin Islands law Title 29 V.I.C. Section 1204(a).
• VIEDA determines whether to certify project based on criteria outlined in the VI law.
• VIEDA determines boundaries of TIF area.
• Type of property tax assessed of TIF area.
• VIEDA calls a public hearing re: the suitability of the proposed project.
• VIEDA approves TIF development plan and certifies TIF project.
• Payment of application processing fee.

The V.I. Legislature adopted TIF in 2008 to:

• Eliminate or prevent blight
• Promote development and economic growth in underdeveloped areas
• Preserve and enhance the tax base of redevelopment areas
• Eliminate shortage of affordable housing available to residents of low or moderate income
• Boost the U.S. Virgin Islands economy
• Restore and revitalize underdeveloped communities

Homeowners and property owners benefit from a successful TIF District in several ways:

• Property values are generally stabilized or improved, which can create a “spill over” benefit for adjacent neighborhoods.
• Certain public improvements – water/sewer/streets, etc. – can be paid for through sources other than general property taxes.
• Increased business activity can mean that fewer homeowner property taxes are required to provide for essential services – police, fire, public safety, etc.

No, there are two types of TIF.

Project based:
Single project on one or more pieces of land that uses TIF only for that project.

District based:
Large area of land is targeted and identified for redevelopment. Projects that develop within the district may be eligible to use TIF as a source of financing or as property values increase, increment can be used for loan programs.

Tax Increment Financing has proven to be an enduring and widely used economic development tool nationwide. TIFs are more frequently used now more than ever because other development tools like Industrial Revenue Bonds and Urban Development and Infrastructure Grants are no longer readily available to local governments.

Billions of dollars in federal and state aid to local governments have been eliminated. At the same time, unfunded federal and state mandates have increased the financial burden on most municipalities. Factor in state imposed property tax caps, and the funding problems facing local governments make it obvious that local governments are left to do more with less.

TIF offers local governments a way to revitalize their communities by expanding their tax base, offsetting, in part, the federal and state funds that are no longer available to them without imposing increased property taxes on the whole community.

Tax Increment Financing is utilized in 49 States and the District of Columbia. Tax Increment Financing legislation was passed by the Government of the U.S. Virgin Islands in June of 2008.

TIF originated in California in 1952 to act as a catalyst for redevelopment areas.

TIF captures increases in tax revenue without any change in tax rates. If property values increase as redevelopment occurs, the municipality will receive increased revenues and utilize those revenues to pay for public improvements without increasing tax rates.

The general tax rate in the scenario above remains the same. Only property taxes resulting from any increase in property values, above and beyond the values in the current year, would be designated for future TIF projects.

Tax Increment Financing is not an additional tax. TIF does not affect the calculation of the tax amount. It affects the distribution of the tax. The tax due is calculated the same as a property that is not located in a TIF district however a portion of the money that would normally go to the County, City, School, and special taxing districts is instead sent to the TIF district.

A tax increment is the difference between the amount of property tax revenue generated before TIF district designation and the amount of property tax revenue generated after TIF designation. Establishment of a TIF does not reduce property tax revenues available to the overlapping taxing bodies. Property taxes collected on properties included in the TIF at the time of its designation continue to be distributed to the school districts, territory, university and all other taxing districts in the same manner as if the TIF did not exist. Only property taxes generated by the incremental increase in the value of these properties after that time are available for use by the TIF.