Tax Increment Financing

In the late 1990s, Hilton Head Island’s revenue growth was beginning to slow, for a variety of reasons, at the same time that the community’s demand for infrastructure and quality of life enhancements was growing.  There was also a growing understanding of the need for investment in our most underserved communities.  Steve Riley’s prior experience with Tax Increment Finance Districts (TIF) led him to explore this vehicle, but at a time when changes in state law made creation of such districts more challenging.  While there were hopes and signals for redevelopment in the Town’s oldest commercial areas, there was less confidence that such investment would occur in the historically Native Island area.

Steve proposed  the State’s first non-contiguous TIF District to capture revenues from private reinvestment and target major capital investment across the island; with particular focus in those areas lacking commercial investment.  With support from the Mayor and Council, community leaders, and staff, a 15-year plan was developed (State law allowed for up to 25 years).  The then-recent change in the law required that the other taxing jurisdictions must proactively consent to participation in the district, allowing their revenues to be diverted to the TIF District.  This was thought to be a death blow for new TIF Districts.

With Steve’s assistance, each of the Town’s taxing partners – the county, the school district, and a local public service district – all agreed to participate.  The School District agreed to a phased approach that allowed them to retain increasing portions of the revenue gain over the life of the District, and the town agreed to limit  the district boundaries to areas zoned for nonresidential development.  The success we had in bringing infrastructure improvements and private investment to the TIF District was such that at the of the 15-year term, each of the participating taxing jurisdictions voted to continue their participation for another 10 years.