Funding & Taxes FAQ
Higher taxes have been the biggest misconception when it comes to OneNorth’s development. We’re here to clear up questions concerning taxes and funding.
Will taxes be raised?
No existing taxes or future tax increases from the community are being used to build this project. Community taxes are not and will not be used for OneNorth. Not a single dollar is coming from taxpayers to fund the development.
What is TIF?
You may have heard the term “Tax Increment Financing” or “TIF” during OneNorth discussions.
Here’s a straightforward definition we found helpful:
TIF is a financing option that allows the funding of infrastructure and other improvements, through property tax revenue on newly developed property. A municipality identifies an area, the Tax Incremental District (TID), as appropriate for a certain type of development. Then as property values rise within the TID, the property tax paid on that development pays for qualified projects costs. After the project costs are paid, the municipality closes the TID. The municipality, schools, county, and technical college are able to levy taxes on the value of the new development thereafter.
Under TIF, an area facing development challenges receives assistance – from its own development -- to grow. This creates a larger tax base for the municipality and the overlying taxing jurisdictions (ex: schools, county, technical colleges). Generally, when the tax base grows and spending is stable, tax rates go down, decreasing property taxes for everyone.
One key basis for the use of TIF is the "but for" requirement. As part of creating the TIF, a municipality must affirm that the development would not happen "but for" the use of TIF. This requirement is important to ensure TIF assists development projects needing help, but that it is not a gift of tax dollars to private developers or property owners.
Another important aspect of TIF is that the “base value” or existing tax obligations at the time of creation of the TIF are excluded from use by the development. Those revenues continue to flow to the taxing jurisdictions.
OneNorth is an investment in Bayside. The local government partners with the developer (that’s us) to add value to the community. TIFs encourage economic growth and jobs. In short, Bayside residents will not be paying for the project. Keep reading to learn about how OneNorth will be funded.
What will pay for the project?
Until certain approved project costs are fully paid, the developer will receive 90% of the tax revenue from the new (incremental) development within OneNorth. This incremental tax revenue will pay for the project build. If the developer demolishes buildings and reduces the tax base, then it will not receive any benefit from additional development until the value of the additional development exceeds the “base value” of the TID.
How will the community benefit?
During the TID, the community will get 10% of the tax revenue from the new (incremental) development within OneNorth in addition to the revenue associated with the base value. This will help reduce residential property taxes on the rest of the community and assure that the village can continue high-quality services.
After the project costs are paid, 100% of the tax revenue from the properties will go to the community, which makes this a great investment in quality growth and fiscal responsibility for the entire Village of Bayside.
Other Considerations:
Site Area & Project Valuation Increment
Project site is only 1.6% of total Village area
Assessed value of project site was 3.5% of total Village assessment (pre-development)
Assessed value of project site will be >13% of total Village assessment (post-development)
15% increase in total Village assessment because of Project
Tax Increment
Village retains tax revenue attributable to district base value
Projected tax revenues over life of TID estimated to be approximately $51MM
Current total annual Village tax collection is approximately $19MM
Village share of annual tax collection is approximately 25% (less than $5MM) (remainder goes to other taxing jurisdictions)
TIF redirects tax collections from other taxing jurisdictions into value creation within the Village ($3 for each $1 of Village incremental revenue)
TIF investment is made on a "but for" basis and invests revenues that do not exist today and will not exist but for the development
TIF structure is on a "no risk" basis to Village
Tax Increment Financing
TIF is one of the most commonly used economic development tools; nearly every state in the U.S. allows TIF
Without assistance, comprehensive redevelopment of the site would not occur
Assessed value of the site is well below similarly situated sites
Without comprehensive redevelopment, updated infrastructure cannot be supported
Comprehensive redevelopment will stimulate upgrades to adjacent properties further raising tax base ("rising tide theory")
With assistance, redevelopment site will increase from 3.5% to 15% of Village tax base providing relief to rest of Village
Comprehensive redevelopment will offer housing options not available in the North Shore and enhance attractiveness of Village
Promotes job growth & retention
Diversifies and increases tax base
Enhances beautification of area
Facilitates redevelopment without increasing taxes (project self-funds)
