Tax Increment Financing (TIF) Districts

Tax Increment Financing may be used to pay for a variety of development activities within the TIF district including:

• land acquisition;
• demolition and removal of structures;
• relocation of occupants;
• infrastructure costs;
• construction of publicly owned buildings and improvements;
• administration of urban renewal activities; and
• payment of bonds issued to fund such costs.

(See 7-15-4288, MCA for more details)

Upon expiration of the TIF, the increment is released back to the local governments and the state. State and local governments use the released increment as newly taxable property for 15-10-420, MCA purposes. Schools treat the released increment as an increase in their tax base and adjust their mill levies accordingly.

TIF Term and Bond Pledges

TIF districts expire on the the 15th year following its adoption, or upon the full payment of all bonds for which tax increment revenue have been pledged, whichever is later. TIFs may extend their expiration date by securing bonds that pledge post-15th-anniversary-increment as repayment. No term extensions are allowed for bonds secured after the 15th anniversary of tax increment provisions. For example, if a TIF was authorized January 1, 2000, it has until January 1, 2015 (its 15th anniversary) to pass bonds secured by future increment to extend the expiration date. Additional bonds may be passed after the 15th anniversary but these would not extend the life of a TIF.

• See a complete list of 2025 TIF districts (PDF, 263 KB)

Base Taxable Value is the taxable value from the year designated as the base year in the TIF district documentation.

Formulas

Increment % to TIF = Total Increment / Total Current Taxable Value
Remaining % to Base = Total Base Value / Total Current Taxable Value

How to Apply Increment %

The Increment Percent is applied to each TIF Levy District's Current Taxable Value:

• TIF Levy District 1 Increment = Increment % × TIF Levy District 1 Current Taxable Value
• TIF Levy District 2 Increment = Increment % × TIF Levy District 2 Current Taxable Value
• Total TIF Increment = TIF Levy District 1 + TIF Levy District 2

The total TIF increment should also equal TIF Levy 1 + TIF Levy 2 from the table above.

Base Taxable Value is the taxable value from the year designated as the base year in the TIF district documentation.

Increment % to TIF

Increment % to TIF = Total Increment / Total Current Taxable Value
Increment % to TIF = 4,135,411 / 11,181,883 = 36.9831%

Remaining % to Base

Remaining % to Base = Total Base Value / Total Current Taxable Value
Remaining % to Base = 7,046,472 / 11,181,883 = 63.0169%

TIF Levy District Increments

• TIF Levy District 1 Increment = 36.9831% × 7,980,687 = 2,951,508
• TIF Levy District 2 Increment = 36.9831% × 3,201,196 = 1,283,903
• Total TIF Increment = 2,951,508 + 1,283,903 = 4,135,411

Check: TIF Levy 1 + TIF Levy 2 = 3,399,119 + 736,292 = 4,135,411 (equals Total TIF Increment)

1. Enter the Base Percent into a custom field.
2. Apply the Base Percent globally to the records in the affected TIF levy districts.
3. At the property record level, calculate:
   • Taxable Value × Base Percent: The taxes levied against the result would receive normal distribution to all affected taxing jurisdictions.
   • Remaining Taxable Value: The taxes levied against the result would be distributed to the TIF district fund except for the six university mills.

• Base taxable value is the total taxable value in the TIF district in the year prior to the existence of the district.
• Incremental taxable value is the taxable value that exceeds the base taxable value for the district in any year. 

For example, if in the year a TIF is created, the base year and current year taxable value are equal to $1 million, there would be no incremental taxable value and no TIF revenue.

If in the second year of the TIF district its taxable value grows by $100,000, then the incremental value in that year would be $100,000. If the total millage rate in the TIF is 0.500, the taxes generated from the increment (TIF revenue) would be $50,000.

If in the third year of the TIF district the taxable value shrinks to $800,000, due to property devaluation, demolition or removal of structures, or similar changes, then the incremental value would be negative ($200,000). This means there would be no incremental value for the third year. When a TIF district's incremental value is less than zero, no revenue is provided to the district.

If in the fourth year the taxable value of the TIF district grows from $800,000 to $1,200,000 due to redevelopment or similar activity, then the increment would increase to $200,000. If the millage rate remains 0.500, the district's revenue would be $100,000 in this year.