Submit a TIF Proposal

In some areas, socioeconomic factors such as income, as well as larger indicators of a poorly functioning market, such as long-term vacancies, may indicate a distressed community. Regardless of project type, these areas may require additional investment to create catalytic projects and incentivize regrowth.

Distress analysis assesses variables such as the following for the project area, municipality, and County:

• Property value trend
• Household income value trend
• Vacancy rates
• Unemployment
• Job number and quality
• Building permit and violation trends
• Crime rates

Measures of disinvestment or decay are one of the most common criteria used to establish TIFs because they quantitatively demonstrate the need for additional resources. Paired with market analysis, these findings should help target project activities.

Market analysis ties participation to project need and/or reducing economic distress. This analysis can also help refine project area boundaries and assess whether certain land uses may require public support. To support project planning, budgeting and implementation, a market analysis should include:

• Trends in vacancies and deliveries compared to municipality and/or county
• Achievable rents/sale prices by land use
• Supportable new units or square footage by land use
• Identification of sites susceptible to change and development capacity
• Estimated prototypical private financial gap per unit or 1,000 square feet (More on this analysis in the "But For" Analysis section.)
• Identification of infrastructure required to support desired development

These analyses should help target the project goals and assess potential budget tradeoffs. Municipalities may need to conduct follow-up assessments based on the market analysis findings, such as estimating infrastructure costs.

This should be included in your Project Plan as required by state statute.

The “But For” Analysis builds on the Distress and Market Analysis. The Distress Analysis shows that the area is underachieving. The Market Analysis shows market conditions. The “But For” Analysis uses that information and the planned or potential developments to show how an agency plans to efficiently catalyze this investment.

The content of this analysis will change based on the development program. The goal is to quantify the need for the proposed intervention. The examples below provide a non-exhaustive list.

If an agency plans to use Revolving Loan Funds, a strong proposal will provide:

• The goal for the fund and the lending criteria designed to achieve that goal
• Market data to support the fund’s goal. For example, if a fund is proposed for building improvement with the goal of helping property owners get a building up to code:
  • Code requirements
  • Records of building code violations
  • High-level analysis of expenses required for proposed improvements
• Similarly for other purposes:
  • Documentation of what you are trying to achieve
  • Demonstration of market conditions
  • Evaluation of cost to improve condition and achieve goal
• The market data would then be used to quantify/scale the size of need and proposed use of funds

For potential developments where a developer is not identified:

• A robust financing gap analysis, as would be used in a site-specific project, is not necessary
• A prototypical financing gap analysis may be used in the alternative. This would include:
  • Market analysis including:
    • Real estate market trends by land use (market-rate rental residential, traditional office, and retail) over the last 5 years, including median rents, occupancy, square feet/units of new development, and absorption
  • Identification of factors preventing market-rate investments, such as: typical building sizes and floor-to-area ratios, typical floorplates, rent concessions, and tenant improvement allowances
  • Identification of potential parcels for development
  • Identification of potential development types for those parcels
  • Market standards for cost-of-capital on that development type
  • Financial analysis to justify a financing gap:
    • Net operating income (NOI) based on rents, occupancy, and expenses;
    • Estimated hard and soft costs of construction; and
    • Benchmark-level of return on total cost (stabilized year yield on cost).
  • Identify a hurdle rate of return by land use that can be used to estimate the public financial assistance needed to make the projects financially feasible.

For infrastructure expenses, an infrastructure needs assessment is preferred. This would include:

• Identification of potential development and relevant parcels
• Evaluation of current infrastructure
• Evaluation of infrastructure required for potential development
• Estimation of infrastructure cost
• Justification for city’s inability to pay estimated cost and plans for offsetting total cost through incorporation in city plans

For grant programs (this works similar to the RLF):

• Identify goals
• Provide grant criteria
• Provide market data necessary to justify grant program
• Use market data to justify proposed size of program

For land trusts:

• Trends in vacancies and deliveries compared to municipality and/or county
• Achievable rents/sale prices by land use
• Supportable new/improved units or square footage by land use
• Identification of sites susceptible to change and development capacity
• Use of this data to justify proposed size of program

Our emphasis for each of this is on quantifying the need and providing the verifiable market data to support the request. Salt Lake County would validate each of the assumptions in-house or contract with a third party for review.

Templates or guides are coming soon.

An example of planned expenditure and required information:

Market analysis ties participation to project need and/or reducing economic distress. This analysis can also help refine project area boundaries and assess whether certain land uses may require public support. To support project planning, budgeting and implementation, a market analysis should include:

• Trends in vacancies and deliveries compared to municipality and/or county
• Achievable rents/sale prices by land use
• Supportable new units or square footage by land use
• Identification of sites susceptible to change and development capacity
• Estimated prototypical private financial gap per unit or 1,000 square feet
• Identification of infrastructure required to support desired development

These analyses should help target the project goals and assess potential budget tradeoffs. Municipalities may need to conduct follow-up assessments based on the market analysis findings, such as estimating infrastructure costs.

A Financial Gap Analysis evaluates whether a developer can achieve their cost-of-capital given the planned development costs and operating income.

To perform this analysis, the developer should provide the following information. Developers will have this information. While each might have different formats, any large project requires this level of due diligence. If developers are concerned about confidentiality, please see the "Confidentiality" subhead above for an explanation of how to keep the records confidential.

• Development Cost Pro Forma
• Operating/Revenue Pro Forma
• A statement as to Cost-of-Capital

If these documents show a financing gap, the agency and developer can work together to identify the cost or revenue drivers. In turn, a detailed explanation must show how the cost or revenue drivers compare to market conditions; why they are different for this project; potential courses of action for resolving those issues; and the course of action recommended by the agency.

Salt Lake County will either validate all market assumptions and cost/revenue drivers internally or contract with a third-party expert to do so. We will share the product of that evaluation, which will either confirm the assistance requested or serve as our counter offer.

A Cost to Compete Analysis compares operation, development, and tax costs in competitive locations to identify the amount of public subsidy required.

If you are considering this option, please contact us immediately. We will also request that you work with EDCUtah and the Utah Governor’s Office of Economic Development.