Revitalize Your Community: How to Leverage Economic Development Tools
As communities seek funding to reach development objectives, they envision economic development as a key component to achieving their goals. Expanding economic activity infuses vitality into a community resulting in increased revenues from rising income and property taxes.
Understanding Economic Development Tools
Economic development tools allow a community to redirect or abate property taxes generated from new development and can be used to attract businesses. These tools are commonly used in combination to support growth strategies, each offering a different mechanism for encouraging investment and funding needed infrastructure and improvements:
- Tax Increment Financing (TIF): can provide funding to build critical public infrastructure
- Community Reinvestment Area (CRA): draw new businesses through property tax abatement
- New Community Authority (NCA): can be used to finance public improvements that provide specialized services in a new area without burdening the entire community
All three tools are fundamentally different, but a deeper understanding of property taxes is critical to understanding how they can impact funding for schools and other property-tax supported community services.
Planning for Community Development and Public Infrastructure
Property tax rates, levies, and laws are constantly changing, leaving many unable to understand the very basics of income tax except that their tax bill keeps increasing. Engaging the services of a subject matter expert may be the right move to help break it all down into palatable segments and assist your community in understanding its unique property tax structure, the difference between inside and outside millage, the difference between full and effective levy rates, and the implication of the 20 mil floor guaranteed for school funding. This will then allow community leaders to determine the economic development tools that work best and begin planning the critical public improvements needed for community development and growth.
As with most things, knowledge is power. Don’t leave available assets on the table. Contact EDG to learn more about economic development tools that might be right for your community.