TIF (Tax Incremental Financing)

Since the City of Sioux Falls established its first Tax Increment Financing District in 1989, the City has taken a conservative approach to the establishment of TIF Districts in Sioux Falls.  The City has effectively and reasonably used TIF as a development incentive for blighted areas within the core of our community.

Tax Increment Financing assists local governments in attracting private development and new businesses into blighted areas.  New businesses mean more jobs, more customers, and in turn, more private investment.  The jobs and additional investment, both private and public, mean more money for the community.

TIF Diagram – Explanation:

• Upon establishment of the TIF District boundary – the base assessed value is established. 
• The property taxes collected from the base valuation continue to be distributed to the city, county and school district jurisdictions throughout the life of the TIF District.
• Additional property taxes that are collected from the increased valuation due to the improvements that will be made go into a TIF Fund. Those additional property taxes collected within the TIF fund are known as the increment. The increment can be used to reimburse the cost of a wide variety of development expenses; including but not limited to: public improvements, site preparation, remediation, architectural fees, land acquisition write down, utilities, and financing costs.
• The increment is determined by conservatively estimating what the anticipated assessed value will be after project completion.
• After the project is completed and the TIF increment is paid out, the TIF District is dissolved, and ALL property taxes are then distributed to the city, county, and school district jurisdictions.

The City of Sioux Falls uses SDCL 11-9 as a regulatory guide for the use of TIF in Sioux Falls. All requests for the establishment of TIF Districts are reviewed with both the Sioux Falls School District and the Minnehaha County Commissioners prior to being reviewed for approval by the Sioux Falls Planning Commission and the Sioux Falls City Council.