Understanding Taxes Within a Redevelopment Area: No Increase, Just Reinvestment

Understanding Taxes Within a Redevelopment Area: No Increase, Just Reinvestment

Living in a community redevelopment area often prompts questions about potential tax increases. However, the answer is clear: residing within a redevelopment area does not lead to higher taxes. This article aims to demystify the concept of tax base, base year value, increment revenue, and how the Community Redevelopment Agency (Agency) utilize these tools for community improvement without additional taxpayer burden. 

The Base Year Explained: 

The tax base refers to the total value of all taxable property within a specific area, like a city, county or redevelopment area. The base year value serves as the foundation for calculating increment revenue. The base year value is the difference in values between ad valorem revenues in the current year and revenues calculated when the trust fund was established.  

Increment Financing: Investing in Growth 

Redevelopment areas are designated for investment and development to create a more vibrant and prosperous community. To achieve these goals, the Agency captures the increase in property tax revenue generated by the rising property values within the area after its designation as a redevelopment area. This incremental increase in revenues fuels the agency’s initiatives. 

Increment Revenues: Putting Growth Back into the Community 

The increased tax revenue collected isn’t simply mixed with the general funds. Instead, it’s channeled into a special trust fund specifically for the redevelopment area. This dedicated funding allows for targeted investments in projects that directly address the area’s unique revitalization goals. These goals can encompass: 

  • Infrastructure improvements: Upgrading roads, sidewalks, and utilities. 
  • Public amenities: Creating parks, playgrounds, and community centers. 
  • Economic development initiatives: Attracting businesses and fostering job creation. 
  • Affordable housing programs: Increasing the availability of safe and affordable housing options. 
  • Historic preservation: Protecting and revitalizing historic landmarks and buildings. 

Reinvestment for a Brighter Future 

By strategically utilizing increment revenues, CRAs act as a catalyst for positive change within designated redevelopment areas. They reinvest the growth-generated revenue back into the community, fostering economic development, improving infrastructure, and enhancing the overall quality of life for residents, without imposing additional taxes. 

In conclusion, residing in a CRA district does not come with a tax increase. Instead, it signifies a commitment by the local government to invest in the community’s future through targeted projects and programs funded by the district’s growth, not additional taxes on residents.