Why do some cities return tax dollars to developers instead of keeping the revenue?

In this episode, Bill Kanatas and Benjamin Salzberg delve into Tax Increment Financing (TIF) and its impact on development projects. They break down how developers partner with municipalities to breathe life into underdeveloped areas — and how they can get reimbursed for contributing to that growth. From understanding the risks to clarifying how these tax structures work, this conversation sheds light on a financial mechanism that most real estate investors have heard of, but few truly understand.

[00:01 - 03:50] The Basics of TIF

• How a city freezes base taxes in a TIF zone for 20 years.
• Why developers help create increased tax value — and how cities return some of that value.
• The significance of the "pay-as-you-go" structure that allows cities to attract projects without upfront capital.

[03:51 - 06:20] Who Benefits From TIF?

• How developers are incentivized through reimbursement.
• Why new developments often lead to more vibrant communities.
• The importance of long-term tax growth for municipalities.

[06:21 - 09:00] Comparing TIF to Opportunity Zones

• How Opportunity Zones limit redevelopment flexibility.
• What makes TIF a more dynamic option for developers.
• The need to grasp structural and legal differences between incentive types.

[09:01 - 13:30] How TIF Helps Clean Up and Rebuild

• Why developers take on environmental risks upfront.
• How the TIF fund can reimburse cleanup costs later.
• The importance of creating agreements between cities and developers.

[13:31 - 16:07] Where Does the Money Go?

• Why early developers often wait years to see reimbursement.
• How funds grow over time to support future projects.
• The significance of transparent agreements to clarify returns.

Connect with Benjamin:

https://www.linkedin.com/in/bensalzberg/

Connect with Bill:

https://www.linkedin.com/in/bill-kanatas-micp-999255141/

Key Quotes:

“You're looking at an undeveloped property... and through this, you're helping the community.” - Benjamin Salzberg

“You're passing it to the next person over in a circle, and you're getting back your own money.” - Bill Kanatas

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