Project Financing

Ways projects are funded:

Tax increment financing - cities issue bonds to pay for improvements (such as a new sewers or streets) within a specified district that are intended to stimulate private development within the district. During the time of redevelopment, taxes are based on the assessed valuation prior to the redevelopment. After the development period, the increase in taxes due to the development (the tax increment) is used to repay the bonds

General Obligation Bonds - are typically used to fund a specific project such as a library or fire station. They are not used to encourage private development, although later private development could be a concequence of the new public facility being constructed (such as apartments or resturants built in the vicinity of a publicly funded baseball stadium.) Becuase all taxpayers in the jurisdiction issuing the general obligation bonds must pay off the bonds through a property tax, a voter majority is required.

Developer Impact Fees - are generally used to fund infastructure improvements made necessary by new development. Although these fees are a common method of raising money, they can have a negative effect becuase developers look for areas to build where imact fees are not charged.

Business Improvement Districts - are used to fund public space improvements, such as streetscapes, to enhance an area's appeal and, indirectly, its property values. Taxes are assessed on those property owners in the district who would benefit from the improvements, so this type of financing is not intended to encourage private development.