As local leaders weigh how to redevelop a soon-to-be vacant lot adjacent to the former Capital Plaza Tower, they’ve repeatedly raised the prospect of introducing tax increment financing — a “TIF” — to the area.
While the acronym rolls off the tongue, its meaning is often less than clear to the casual observer.
Under a TIF, state and local governments lure private development by promising away future increases in property and occupational tax revenue. On its website, the Kentucky League of Cities describes the arrangement, which is often found in conjunction with public-private partnerships, as the use of growth to pay for growth.
For a set period of time, local governments pay for public projects or new development by diverting the resulting tax revenue increases in well-defined TIF districts to developers. During that same time — usually 20 or more years — schools and other existing taxing districts would receive just their base level of revenue.
This is not the first time local government in Frankfort has considered creating a TIF district to fund redevelopment. In December 2014, members of a joint city/county TIF advisory group made their case for the creation of TIF districts in Frankfort during a public meeting at Paul Sawyier Public Library, The State Journal reported at the time. TIFs would, among other things, make the Frankfort area more “business friendly,” the group argued.
“It may not change the map for some developers,” then-Downtown Frankfort Inc. Executive Director Brittain Skinner said. “But it does sweeten the pot a little.”
In Kentucky, one of the highest-profile TIF projects has been Louisville’s KFC Yum! Center. Last year, the state auditor’s office found the Yum Center’s TIF revenue projections had been overly optimistic, with actual TIF revenue of $10.3 million in 2016, compared with a projection of $15.9 million, Louisville Business First reported.