RAPID CITY, S.D. (KOTA) – Recently, a number of tax increment financing districts have been popping up in Rapid City, including the Block 5 Project and Sagebrush Flats Affordable Housing.

This may leave some wondering what exactly tax increment financing is?

The City of Rapid City’s tax increment finance planner, Mike Dugan, said a TIF is primarily used to finance public infrastructure, but they can also be used as grants to help provide private development that adds amenities to a town.

He added, it helps create new jobs and new property and sales tax opportunities.

In addition, he said tax increment financing is typically applied to underdeveloped properties.

“Typically, the developer would go out to cover the TIF funding, would go out and seek outside funding from a finance institution or investors to provide those costs up front for the future development,” said Dugan.

He said as improvements are being made to a property, the TIF will generate additional property taxes on the development.

As a result, the property taxes that the developer has created with their new development over time can be used to pay back a loan they may have borrowed from a financial institution or investor investing in the project.

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