®) THE CITY OF NASHUA ‘The Cate City’
Brosemic Dave logment
To: Brian McCarthy, President
From: Tim Cummings, Director of Economic Development
Ce: Board of Aldermen - Mayor Donchess — CoS Kleiner — Director Marchant
Date: February/2018
Re: Overview of TIF Program --- Relative to O-18-006
I am writing to share with you and your colleagues a broad overview of how “Tax Increment Financing”
works in New Hampshire.
Request
Additionally, I am requesting that this communication be forwarded on to the respective Chair(s) that may
have jurisdiction over this matter within the city. Historically and it is my understanding both Planning &
Economic Development and the Finance Committees have dealt with this matter in the past.
Ideally, I would welcome an opportunity to appear before each committee to discuss and have a general
conversation relative to how a TIF program works.
Tax increment financing (TIP) is a public financing tool used to help spur economic development in
areas that may otherwise be left to fallow in the wind. Introduced in California in the 1950's, TIF has
been used in most states across the county, including New Hampshire.
Nashua Specific Background
This is a tool that has been used in Nashua previously. In 2004 the city created the Nashua Riverfront
Promenade Tax Increment Finance District and a bond was issued for approximately $1.0M, which went
toward the creation of a river walkway and associated landscaping. Essentially, $100,000 is collected
yearly and applied to a bond as a payment for the above. In development finance this is a very common
tool used to spur economic and community investment.
What is a TIF?
In simple terms, a TIF Plan sets forth general goals for improvements to be carried out in a TIF District,
which is a defined area made up of individual properties. These improvements usually involve
infrastructure [roads, utilities, and public amenities such as parking and parks] which are all key
components for attracting and creating a healthy robust community. A TIF can help to create a
cooperative public / private partnership to achieve the goals and also be used to bring projects to fruition.
How are the improvements funded?
A key component of a TIF plan is the capturing and dedication of the new tax revenues resulting from the
new development to help pay for the costs of the improvements. A variety of other funding sources (for
example, bonds, loans, grants, or gifts) can also be used to pay for the improvements performed by the
City.
How is new tax revenue captured?
When the TIF district is created by the Board of Aldermen the base line values for the individual
properties in the district are established. Improvements to properties or new developments in the district
create added value and result in new tax revenues above and beyond the base line revenues. The new
revenues are set aside in a dedicated TIF account to pay for the improvements undertaken by the City; if
bonds are a funding mechanism for a public improvement, the TIF funds most likely go towards the
yearly bond payment obligations. The revenue can be used to achieve goals of the TIF Plan.
