CRAs are financed based on a method known as Tax Increment Financing (TIF). It is a unique tool available to cities and counties for the redevelopment of urban areas. It is used to leverage public funds to promote private sector activity.
Property values in a CRA are capped or frozen at the assessed value in a base year, the year when a CRA is created. Thereafter, certain tax revenues due to increases in property value in excess of the base year value are deposited into the CRA Trust Fund and can only be spent in the redevelopment area.
Taxing entities, which contribute to the tax increment, continue to receive property tax revenues based on frozen value. These remain available for general government purposes. Any funds received by a tax increment financing area must be used for specific redevelopment purposes outlined in the statute and contained in the CRA redevelopment plan, and not for general government purposes.
The Community Redevelopment Act calls for private sector involvement to the maximum extent possible, to coordinate public and private sector initiatives and successfully revitalize communities which would otherwise further decline. Tax increment revenues can be used immediately, saved for a particular project or can be bonded to maximize the funds available.
CRAs are a specifically-focused financing tool for redevelopment. County staff does not establish policy for the County -- it develops and administers a plan to implement that policy. The County’s Community Redevelopment and Economic Policy Analysis Division acts officially as a body distinct and separate from the governing body, even when it is the same group of people.
The CRA term is limited to 30 years. After the sunsetting of a CRA, or in the event that all TIF revenues cannot be reserved for, or open on any eligible projects, any remaining CRA Trust Funds are returned to each taxing authority on a pro-rata basis.
