Explained: Downtown Covington’s Tax Increment Financing District
“It allows a city or county to designate an area for development purposes,” Parsons said of the TIF. “They can then pledge the incremental increase in taxes to develop the area more.” The TIF relates only to new tax revenue created in the designated district and the city has pledged to reinvest eighty percent of its share back into the district. That means of any new and expanded business or any new payroll taxes collected in the area, eighty percent goes right back into the area for economic development. Kenton County officials have agreed in earnest, but not officially, to reinvest sixty percent of its share.
The Kentucky League of Cities explains it as, “…the difference between the amount of occupational and property tax generated before creation of a development area and the amount of tax revenue generated after creation of a development area. Taxing districts continue to receive the base tax amount while tax increments are used to fund the public costs of development. Growth is used to pay for growth.”
Monk, Michael. The River City News 2 January 2012.