LIFT is a variation of Tax Increment Financing (TIF). Although TIF is used in 48 states, the Washington State Constitution prohibits the lending of state credit, and thus the TIF tool. In other states TIF is a method for local jurisdictions to leverage future gains in property taxes to invest in current infrastructure improvements and other economic development initiatives. TIF harnesses the increase in property tax revenue from a growing and redeveloping area to repay bonds that financed the improvements.
Alternatively, LIFT is a community development tool that was approved by the Washington State legislature in 2006. LIFT allows selected local governments to take advantage of tax revenue generated by private investment in a designated RDA to make payments on bonds used to finance public infrastructure improvements. Specifically, LIFT provides up to $6 million annually in redirected state retail sales taxes to help pay for public infrastructure projects that are funded with at least an equal amount of local redirected property taxes. The redirected property tax must be comprised of new regular property tax revenues from new construction within the RDA.
If Tacoma is selected for LIFT funds, up to $1 million per year for 25 years could be invested in infrastructure projects in downtown and the Dome District. The City anticipates designing and constructing the following public improvements in the RDA:
- Structure(s) to accommodate 1,500 parking spaces
- Right-of-way and streetscape improvements including; streets, sidewalks, crosswalks, lighting, landscaping and traffic controls
- Utility infrastructure
- Sustainable storm drainage
Total costs of the proposed improvements are estimated at $72.3 million. The City will invest approximately $45 million (62%) from its Parking Fund, the Real Estate Excise Tax, the Sewer Enterprise Fund, and local property taxes generated from new development in the RDA. It is anticipated that $14 million (19%) of Federal funds would be appropriated for this project. Beginning July 1, 2011, LIFT funds projected to be generated over 25 years would be used to repay a General Obligation Bond, which would yield an estimated $13.3 million (18%) in net proceeds. LIFT would be used primarily for parking infrastructure as well as right-of-way and streetscape improvements.
The City anticipates that the projected investment in public improvements will act as a catalyst to attract at least $400 million of new private investment in office development and the creation of approximately 2,000 well-paying jobs in international financial services, which is a key industry cluster for the City of Tacoma and the State of Washington, and other fields.