Tax Incremental Financing & Tax Credits

Overview

Tax incremental financing (TIF) and federal and state tax credits can help a community stimulate economic growth and make development projects more viable, but the complexity of these programs can be daunting. Michael Best helps clients make sense of the rules and craft the right financing structure for each project.

We advise developers, municipalities, lenders, and other clients on TIF and tax credit financing for many different types of projects. Whether it’s exploring financing options for the revitalization of a blighted area, preserving historic buildings, enhancing energy efficiency, introducing affordable housing to a project or neighborhood, or cleaning up environmental contaminants, we can help clients achieve their goals.

 

Our comprehensive capabilities include:

  • Forming TIF districts
  • Negotiating and drafting development agreements related to the use of revenues created by the TIF district
  • Structuring tax increment bonds and providing counsel in the bond issuance
  • Developing “pay-as-you-go” or developer-funded TIF arrangements
  • Combining TIF with other financing tools to enhance the incentives available for the project
 

Federal and State Tax Credits

We have advised clients on the use of federal tax credits since these incentives were introduced. With deep experience in each type of federal credit, as well as many state tax credit programs, we know what will work best for a given project. Key programs include:

Low-Income Housing Tax Credits

Low-Income Housing Tax Credits (LIHTC) account for the majority of all affordable rental housing created in the U.S. These credits are also commonly called “Section 42 credits,” in reference to the applicable section of the Internal Revenue Code.

New Markets Tax Credits

New Markets Tax Credits (NMTC) often support projects that revitalize underserved urban and rural neighborhoods for projects as diverse as hotels, commercial and mixed-use developments, and schools.

Federal Historic Tax Credits

Federal Historic Tax Credits (HTC) help restore underutilized but historically important structures to serve new uses. Such projects have included former mill buildings, department stores, theatres, and municipal structures.

Energy Tax Credits

Energy Tax Credits for generation sources such as solar, wind, and biomass have recently been instrumental in enabling employers and utilities to take advantage of energy installations of all sizes, from residential rooftop solar facilities or single wind turbines to utility-scale facilities.

Production Tax Credit

Production Tax Credit (PTC), extended by Congress at the end of 2015, helps clients benefit from certain high-performing energy technologies such as wind, biofuels, and biomass.

State Historic Tax Credits

State Historic Tax Credits, available in many states, are often designed to spur private investment in older neighborhoods by providing incentives for the rehabilitation of historic buildings. In certain cases, they can be used together with federal historic tax credits.

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