Economic Development Glossary
As the Lead Economic Development Organization for St. Joseph County, we want to not only inform you on what is going on from a commercial construction and business expansion standpoint, but we also want to help educate you on the typical terms used in economic development work. Check out the glossary below.
Tax Increment Financing Area (TIF)
TIF is a financing strategy designed to improve a targeted project area or district without drawing on general fund revenue or creating a new tax. TIF does not capture or use residential taxes. The TIF is voted on and established by the County Redevelopment Committee and Council.
For example, assume a vacant 500-acre parcel in a TIF currently pays $100,000 in taxes. A company buys the parcel and builds a structure that will generate $1 million in annual property taxes. The TIF will capture $900,000 of the new taxes ($1,000,000 new tax - $100,000 old tax) for infrastructure and other public improvements within the TIF.
The $100,000 taxes from the original vacant land will continue to be disbursed as it was before the company's purchase.
Real & Personal Property Taxes
- Real Property includes land plus the buildings and fixtures permanently attached to it.
- Personal Property is property that is not permanently affixed to land, i.e., equipment.
Abatements
The purpose of tax abatements is to encourage investment and the development of jobs and to promote other community objectives, such as affordable housing, which might not otherwise occur.
A tax abatement is a cost phase-in offered by a state or municipality to businesses, including but not limited to the purchase or development of buildings and manufacturing equipment.
Generally, new businesses require significant upfront investments before the start of production. The Tax Abatement phases-in property taxes to help offset the initial startup costs.
Tax abatements have a set number of years. After the abatement expires, the Company is responsible for the total taxes owed to the County. A tax abatement is not cash or up-front money taken from somewhere else. It is a tax and rate break on new potential revenue that would otherwise not exist.
For example, a new building on a 500-acre parcel has a 100% tax bill of $1 million. The company has an 80% tax abatement for ten years (maximum years permitted for real property abatement). Under the 80% tax model, the new building will generate $200,000 in annual taxes and $2 million over the 10-year abatement. The Company is responsible for the total annual $1 million property tax when the abatement expires.
St. Joseph County Tax Abatements
St. Joseph County Tax Abatement Ordinance
Shovel-Ready
Shovel-ready generally refers to commercial and industrial sites that have completed all the planning, zoning, surveys, title work, environmental studies, archeological studies, soil analysis, and public infrastructure engineering.
Shovel-ready sites are growing in demand among companies and site selection consultants due to the reduction in time for a company to begin constructing a new facility. It is a competitive advantage for a community to have large industrial sites 100% shovel ready.