Special Development Districts
WHAT IS A SPECIAL DEVELOPMENT DISTRICT?
Similar to a TIF, it uses money raised from the sale of bonds to reimburse developers for the cost of infrastructure.Instead of using property tax revenue to pay off the bond, all homeowners within the improved area pay a flat fee. That money is used to pay off the bond.
WHAT IS TAX INCREMENT FINANCING?
It's a way for governments to move along development projects.Although often done to help improve blighted areas, it can be used for any kind of project. A government will sell bonds, and the money raised is given to the developer for reimbursement of infrastructure costs such as sewers or roads.As the development improves the value of the site, the additional property tax that is generated goes to pay off the bond. When the bond is paid -- usually in 20 to 30 years -- the government resumes collecting all the property taxes.
Once the project is complete, the infrastructure paid for through the TIF will be owned by the government or maintained by a public agency. If a project fails or a developer goes bankrupt, the entities that purchased the bonds place liens on the property. The government does not use its own financial resources to cover the debt.
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