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How To Submit a Tax Increment Financial Proposal

Recently Salt Lake County engaged a national development consultancy to conduct an impartial analysis of current TIF projects and recommend potential improvements. That analysis is now available.

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If you’re a Municipal Agency

If you are a municipal agency considering a project, please contact Senior Economic Development Manager, Kersten Swinyard to get additional information on County processes and work toward a successful proposal.


We acknowledge that different municipal agencies have different levels of internal capacity. If you need help providing analysis, please let us know. When appropriate, the County may be able to assist.

A person smiling in front of a brick wall.

Kersten Swinyard

Senior Economic Development Manager

Phone Number (385) 468-4869

Proposal Requirements

As part of Salt Lake County policy, projects must satisfy the “But For” requirement. This requires a quantitative analysis of why, but for the proposed intervention, the planned or potential developments would not occur.

To satisfy the “But For” requirement, a project proposal should first identify the planned or potential developments. This should include: 

  • A map of the project area with relevant parcels identified 
  • Parcel details, including size, zoning, and other information from a General Plan 
  • Identification of property type and class for the planned or potential developments, such as Class A Office, Retail, or Mixed-Use Office/Residential
  • Any plans, specs, drawings, or other details will strengthen a proposal

The more you can help us understand your vision, the better. Ideally, this information will be contained within a Project Plan. If it is not, please attach additional documents to support your Project Plan. 

Confidentiality

If you work with developers to provide documentation, please advise them that their documents can remain confidential and not subject to public records requests according to Utah Code 63G-2-309, if they provide (a) a written claim of business confidentiality; and (b) a concise statement of reasons supporting the claim of business confidentiality. Anyone may do so by completing and submitting a request.

District Improvement or Site-Based Project Requirements

Additional requirements will be determined whether a project is district improvement or site-specific. 

For a District Improvement Project, a strong proposal includes:

Distress Analysis

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

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.

Cost Benefit of Fiscal Analysis

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

But For Analysis

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 County’s emphasis in the “but for” analysis is to quantify the need and provide verifiable market data to support your request. The County will validate each assumption in-house or by contracting with a third party for review. The goal is to quantify the need for the proposed intervention. The examples below provide a non-exhaustive list.

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 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

An example of planned expenditure and required information:

Expenditure Cost Support from "But For" Analyses County Information Requests
Parking structure(s) $5,100,000

Financial Gap Analysis: Estimate of public funding need

Market Analysis: Typical subsidy required

Parking study demonstrating need (if available)
Relocations, demolition, land acquisitions, infrastructure, etc.  $1,000,000 Market or Distress Analysis: Sites susceptible to change and needed improvements district infrastructure needs

1. List of known projects with extraordinary costs and cost estimates

2. Typical cost of past projects for programmatic needs

3. Type and amount of other funding sources

Capital Projects $1,500,000
Developer Reimbursements $1,500,000

Market Analysis: Sites susceptible to change

Potential new uses

Prototypical funding gap

1. Pro formas from planned projects

2. Protypical gap analysis for sites susceptible to change

For a Site-Specific Project, a strong proposal will include: 

Market Analysis

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.

Financial Gap Analysis

A financial gap analysis evaluates whether a developer can achieve their cost-of-capital with the planned development costs and annual net operating income. This analysis benchmarks cost and revenue drivers to market conditions. It also examines how and why a particular project differs from market conditions.

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 that is different from market conditions, the agency and developer can identify the cost or revenue drivers and provide a detailed explanation about how those drivers are different from broader market conditions. The agency and developer can also discuss potential courses of action for resolving the gap and the particular 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 counteroffer.

If the Developer Requests Assistance to Compete Against Incentives Offered by Other Jurisdictions, then a Cost to Compete Analysis

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.

 

If you’re a Developer

A person smiling in front of a brick wall.

Kersten Swinyard

Acting Economic Development Director

Phone Number (385) 468-4869

FAQ

Tax increment financing (TIF) is a public financing tool that local municipalities use to incentivize private development in certain areas within their jurisdiction called “project areas,” which are created through the adoption of an ordinance or resolution by the local governing body or city council.

After a project area is created, the redevelopment agency that created the project area is entitled to receive all or a portion of the tax increment dollars generated from the project area for a specified period of time (usually 15 to 20 years).

Redevelopment projects are commonly used for land purchases, installing infrastructure, financial incentive agreements, property tax rebates, and more.

Tax increment dollars are property tax dollars received above and beyond an established baseline level of property taxes—typically, the level of property taxes generated from the project area prior to creation of the project area.

The redevelopment agency can then use the tax increment dollars it collects from the project area to incentivize development within the project area, which typically increases property values and, in turn, the total amount of property tax revenues generated from the project area.

After expiration of the tax increment collection period, the tax increment dollars that previously flowed to the redevelopment agency will flow to the taxing entities that levy the property taxes within the project area.