Frequently Asked Questions about the Vintage Club Development Tax Increment Financing (TIF) District

The city has received several questions from residents regarding the Vintage Club development, the Tax Increment Financing District that was established for that development and the public improvements that will be constructed as a part of the development.  Following are answers to some of those frequently asked questions.

What is a TIF?

Tax increment financing (TIF) is a tool available to local governments to finance public infrastructure improvements that augment private development projects which bring benefits – more jobs, increased earnings tax, increased property tax base – to the community.   The increase in property value from the development will, in turn, result in more property taxes being paid by property owners in the development, and that extra amount of property tax is the tax increment.

Who’s funding the TIF?

The TIF at the Vintage Club is designed to provide cash flow to make public improvements at the site, including underground public parking in the retail/commercial area of the development. This cash flow comes from the property taxes paid by property owners in the development, which are then remitted to the City by the Hamilton County Auditor to fund the cost of public improvements associated with the area’s development. Normally, the City would receive approximately 15% of property taxes paid. Under a TIF, the City shares 50% of these property tax dollars with the Sycamore School District.
In addition to the property taxes from the TIF, the City is the beneficiary of the earnings taxes paid as well as any development fees, etc. by all properties in the TIF area. If there are not sufficient tax revenues to repay the debt for the public improvements, the developer will be required to make up any shortfall.

Does the TIF redirect tax money away from Sycamore schools?

The approval of any TIF in Montgomery requires approval and partnership from the Sycamore School District, Hamilton County, the developer of the project, and the City of Montgomery to bring about a successful development in our community.

During the anticipated 30 year life of this TIF, as stated above, the Sycamore School District will receive 50% of the taxes collected by the City. The payment will come from the redirected property taxes (TIF revenues) from properties in the Vintage Club development.

Will my taxes increase?

No. This cash flow comes from the property taxes paid by property owners in the development, which are then remitted to the City by the Hamilton County Auditor to fund the cost of public improvements associated with the area’s development. Instead of these funds being split among entities, the funds are diverted into a TIF account to be used to pay for any public improvements needed on the development site. Diverting the tax dollars for this use is what allows the project to be fully funded over the 30 years without requiring the use of general funds or having any financial impact on other residents and property owners in Montgomery.

Why does the City need to help with private development projects?

Walkability, affordability, and attractive amenities are important to retail customers and building the parking underground will make the Vintage Club development much more attractive and allow for increased density of retail and office use, which will generate more revenue for the City in terms of earnings tax collections, and ultimately, real estate tax collections.

The TIF allows the City to put more restrictive building and zoning guidelines on the commercial section, push the unattractive parking lot underground, and help to offset additional costs of the underground parking and other public amenities of the project.

The reason the City is helping incentivize this development is the desire for a unique, quality project that reflects the character and vision of Montgomery.  The City believes it is worthwhile to invest in a public/private partnership in this area of the community to ensure it has a Montgomery charm like the Heritage District, and not just another strip center with residential development hidden behind it.

How much will the project cost?

As part of the commitment to the public improvements, the City has programmed $8 million in the 2010 Annual Budget to pay for the construction of an underground parking garage proposed in the Vintage Club development. While included in the city's budget, it is important to note that the funds for this construction will not come from general tax revenues.  The City will borrow the funds and this debt will be repaid with the property tax dollars paid by property owners in the Vintage Club using Tax Increment Financing.