Video: What is a TIF?

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GOLDEN TRIANGLE AREA, Miss. (WCBI)- Big time businesses are always beneficial, because they bring in big time revenue.

But to help lure those businesses in, sometimes Tax Increment Financing Plans are used a recruiting tool.

They help bring in economic development.

Just recently, the city of Starkville approved a TIF plan for its new Academy Sports Project.

“The bigger business recruits that are coming are on the national level, and in most cases, its not a negotiable deal, they expect TIF’s,” CEO of Golden Triangle Development Link, Joe Higgins said.

But what exactly is TIF?

“Its referring to the incremental growth in tax revenue that occurs once a property tax is developed,” Starkville Mayor Parker Wiseman said.  “You’re just taking a piece of property that was probably worth less than 1 million dollars and you’re adding value to it and all of tax is taxed at the city and county tax property rate,” Wiseman said.

Then the next question becomes what percentage of sales tax do they pledge.

“You have to measure those transfer sales, some people call it shrinkage, you’ll have to measure how much of that sale is already occurring before you make your pledge,” Higgins said.

However, not all businesses receive TIF’s.

Starkville Mayor Parker Wiseman said, when deciding which business to take a chance on, they look for businesses that will bring in revenue to the city, such as Academy Sports.

“You’ve got a big box national sporting goods retail which offers a national brand, very large inventory, and products that are not available so that’s very appealing,” Wiseman said.

However, there can be risks when issuing a TIF.

“What you don’t know on the front in is, you don’t know how much volume of revenue sales that retail is going to generate,” Wiseman said.

However, Higgins said despite the risks, there are still great benefits that come with TIF’s.

“If they come and the city or the county pledges a half of the new taxes to support the project, they’ll still get a half in taxes, so most people view it as a win win situation,” Higgins said.
With the addition of Academy Sports, the city of Starkville now has 5 business that at came in on a TIF.

Categories: Local News

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