FAQ about TIF

Frequently Asked Questions about Tax Increment Financing

The vision for a vibrant, healthy, and inclusive mixed-use neighborhood in the Bend Central District with safe connections between east and west Bend depends on the Core Area Plan to be funded through Tax Increment Financing (TIF). 

What is TIF?

Tax Increment Financing (TIF) is a funding strategy designed to implement projects within a designated area. The goal is to make strategic investments that spur development, address blighted conditions, and support property investments that would not have otherwise occurred.

When a TIF district is created, the property tax revenue from that area is diverted into two revenue streams:

  • Frozen Base: Continues to go to the taxing jurisdictions, such as the city, county, school district.

  • Increment: As property values increase over time from new development or appreciation, the increment goes to the TIF District instead of overlapping taxing districts.

More: How does Tax Increment Financing (TIF) work?

Is TIF a new tax?

No. It is not a new tax on anyone. Or business. Or property. And it doesn’t actually take taxes away from the taxing districts. The current assessed value of all properties within the Core Area is $1.17 million. The TIF investments are projected to increase that value to ~$5.61 million over 30 years. Each year, the amount of tax revenues above the 2020 baseline is the increment the TIF uses to fund or bond for projects. 

 

How much would each of the taxing districts contribute to TIF and what are the services they provide to the public?

  • Deschutes County 

    • 0.0103% of total budget in 2022 would be impacted by TIF

    • Total District Budget: $500 million (FY 2021 Proposed Budget).

    • Services: Community Justice, Deschutes County Health Services and Veterans’ Services, General Government such as: Assessor’s Office, Clerk’s Office, District Attorney’s Office, Justice Court, etc.

  • Bend Metro Parks & Recreation 

    •  .08% of total budget in 2022 would be impacted by TIF

    • Total District Budget: $78 m total budget (budget)

    • Services: Park and recreation services

  • Countywide Law Enforcement 

    • 0.103% of total budget in 2022 would be impacted by TIF

    • Total District Budget: $44.7 million (FY 2021 Proposed Budget).

    • Services: County-wide Sheriff services including the jail.

  • County Library 

  • City of Bend - the City of Bend would also contribute to TIF from the general fund

  • COCC 

  • School Districts - School Districts send their taxes to the State and it is redistributed so TIF does not have much of an impact on our local schools

  • Countywide Extension

  • 911 

How much money will the TIF raise over 30 years and what will that money be invested in?

This funding mechanism has the potential to raise a total of $195 million, which would serve the debt on $111 million worth of investments over 30 years. The money will be invested in projects and programs that are needed to help the community’s vision for a vibrant, healthy, and inclusive mixed-use neighborhood in the Bend Central District (BCD)* come to life. These categories were determined through a year and a half long process led by the citizen Urban Renewal Advisory Board (URAB) and informed by public outreach (over 3,000 people engaged) and expert analysis:

  • Transportation, Streetscape, and Utility Infrastructure - When Bend was founded, the BCD was the eastern edge of town and industrial uses dominated because it is next to the railroad tracks. As the city expanded, Third Street became a main thoroughfare and automobile-oriented development took precedence. Since there has been little new development in the past several decades, there have been no SDC funds to improve the missing sidewalks, limited crosswalks, few trees, and insufficient lighting that make the streets in the BCD unwelcoming and unsafe for customers, families, and potential residents. Barriers such as Third Street, the BNSF Railroad, and US 97 Parkway make it difficult for the many residents of the inner easide to travel between the BCD and the bustling west side of Bend. Project examples include: Midtown Bicycle and Pedestrian Crossings, intersection improvements such as Revere Ave and 4th St. and Greenwood Ave and 2nd St., Sidewalk Infill, a protected bicycle path on Olney Ave, transit hubs, and Streetscape design such as trees, benches, and lighting.

  • Affordable Housing - Approximately $18 million for affordable housing would be invested in the Core Area, and could also support helping existing naturally-occurring affordable housing remain. Examples: Cook’s Crossing senior apartments in Redmond with Mosaic Medical facility on ground floor, program to grant low-income homeowners funds for bringing their house up to livable standards in exchange for deed-restriction. 

  • Business Assistance - There are hundreds of small, local businesses in the Core Area. They are the backbone of our City. TIF funds could grant money for COVID-19 updates, creating reduced lease commercial spaces, building improvements for older buildings to come up to code, landscaping and outdoor amenities for customers, and many other options.

  • Parks, Community Gathering Spaces, and Public Art - Open space and cultural amenities are an essential part of a vibrant community.

    *Note: the Core Area includes other parts of the City surrounding the BCD, but much of the focus will be on the BCD, which is the most underutilized part of the City. See Urban Design Framework 

 

How will this help our community?

Funding the Core Area Project through TIF is essential to the future of our entire community. Bend’s development pattern over the past several decades has been unsustainable, and the transportation system followed suit by accommodating more and more cars driving longer and longer distances. With the population expected to increase 45% by 2035, we are in dire need of more places for people developed sustainably. The BCD is underutilized, with only about one resident per acre, so housing and jobs can be added here without sprawling into our natural surroundings

What are the implications for our service districts?

Implications for the Parks District

If the value of the properties in the TIF area increases by 5% next year (probably unlikely due to the expected recession), the Parks District would forgo $62,462, or just .08% of the total budget. Since the value of the dollar decreases each year, the value of those tax revenues is more like $15 million in today’s dollars over 30 years. If growth is less than 5%, TIF would collect proportionately less of those property tax revenues - and remember, those revenues are not a foregone conclusion - it is only the amount over and above what is being collected today that could be accessed by TIF. 

Additionally, TIF funds could be used to purchase property or provide improvements for parks, civic centers, community centers, etc. So taxing districts like Parks, Library, and Schools could partner with the City to make the most of TIF funds.

Implications for Deschutes County

If the value of the properties in the TIF area increases by 5% next year (probably unlikely due to the expected recession), Deschutes County would forgo $52,086, or just 0.0103% of the total budget. If the area grows by  an average of 5% over 30 years, the total amount in 2020 dollars the county would forgo is $22.2 million. If growth is less than 5%, TIF would collect proportionately less of those property tax revenues - and remember, those revenues are not a foregone conclusion - it is only the amount over and above what is being collected today that could be accessed by TIF. 

Implications for County Law Enforcement

If the value of the properties in the TIF area increases by 5% next year (probably unlikely due to the expected recession), the Sheriff’s Office would forgo $46,173, or just 0.101% of the total budget. Since the value of the dollar decreases each year, the value of those tax revenues is more like $11.9 million in today’s dollars over 30 years. If growth is less than 5%, TIF would collect proportionately less of those property tax revenues - and remember, those revenues are not a foregone conclusion - it is only the amount over and above what is being collected today that could be accessed by TIF. 

Implications for School Districts

Since the School Districts send local taxes collected to the State School Fund and they are redistributed evenly across all school districts in Oregon, the Bend-La Pine School District’s budget is more impacted by revenue forgone by TIF districts in the Portland Metro Area than it would be by the Core Area TIF.

Additionally, TIF funds could be used to purchase property or provide improvements for parks, civic centers, community centers, etc. So taxing districts like Parks, Library, and Schools could partner with the City to make the most of TIF funds.

Implications for Local Bonds

Urban renewal does not impact local bonds such as the recently passed $268 million Construction Bond for the Bend-La Pine School District.


Why would the city focus on the Core Area instead of other areas?

It Makes Community Sense

The Bend Central District and the inner eastside neighborhoods are one of the most overlooked areas in the City. As the rest of the City has been built, this area has not seen transportation updates or any new housing. Greenfield developments receive City subsidies in the form of roads and infrastructure, but redevelopment in an existing area does not automatically receive those same funds.

People who live in the inner eastside do not have a safe way to cross major barriers like the US 97 Parkway, the railroad, Third Street, and Greenwood without access to a vehicle. These residents are twice as likely to be impoverished than residents in the rest of Bend, and deserve updates to failing infrastructure.  

It Makes Fiscal Sense

Denser development makes fiscal sense to encourage because it returns more property tax revenue per acre. For example: An underdeveloped property in the BCD such as paved lot on NE 2nd St is assessed at around $130,000 and pays about $2,000 per year in taxes. Compare this to a recently developed two-story building on a similar-sized lot a few blocks away, which is assessed at around $900,000 and pays approximately $14,000 per year in taxes. Financially, more dense development is better for the community as a whole than the alternative of sprawl, which creates a liability in the form of roads and infrastructure that need to be maintained over their lifetime.

What about gentrification and displacement?

Thanks to BCD Initiative input, equity strategies have been incorporated into the Core Area Plan that would be funded by TIF. These strategies will avoid displacing minority and impoverished residents and businesses, instead lifting them up with business assistance grants, funding for affordable housing, and more. More addressing equity gaps.

Why should taxing districts consider this an investment in the future?

The TIF funds would be used to invest in infrastructure and programs that would not have otherwise happened, which will increase the overall assessed value of taxed properties in the Core Area. At the end of the 30 year lifespan of the plan, these increased revenues will result in an accumulated “boost” in the tax With a 5% growth rate, each taxing district would have a considerably higher tax base (approximately 4x) in that area to draw from in 30 years. It is the same principle as putting money in your retirement account each year, except the return is more or less guaranteed.

It will leverage private investment at a rate of 4:1. 

Shouldn’t we put this plan on hold given the COVID-19 pandemic?

This is a thirty year plan for the future of Bend, the planning for which started more than 15 years ago and is already long overdue for implementation. But during a recession year, the Bend Urban Renewal Agency (which consists of the 7 City Councilors) can choose to take less than the increment or none of the increment and allow those revenues to go back to the taxing districts, which is called an underlevy.

 
 

Watch Expert Speaker on How Cities use TIF Effectively

Featured speaker Michele Reeves is a national expert in helping communities recognize and leverage their strengths, and accomplish their economic development goals. Michelle will show how other communities have successfully used redevelopment to create vibrancy and provide economic opportunity to a wide cross-section of their community, along with pitfalls to avoid.

CO LandWatchTax Increment Financing, TIF