Tax Increment Financing (TIFs) Districts


Tax Increment Financing (TIF) is a way for certain districts to use property tax revenue to fund new development. It works by separating taxable value into base and increment values, so that revenue from the base value continues to go to the regular taxing jurisdiction, but as taxes increase over the years, that growth—the increment—go to the TIF to pay for development activities within the TIF district.

The development of TIF districts is authorized by 7-15-4282, MCA.

Tax Increment Financing may be used to pay for a variety of development activities within the TIF district including:

(See 7-15-4288, MCA for more details)

Upon expiration of the TIF, the increment is released back to the local governments and the state. State and local governments use the released increment as newly taxable property for 15-10-420, MCA purposes. Schools treat the released increment as an increase in their tax base and adjust their mill levies accordingly.

TIF districts expire on the the 15th year following its adoption, or upon the full payment of all bonds for which tax increment revenue have been pledged, whichever is later. TIFs may extend their expiration date by securing bonds that pledge post-15th-anniversary-increment as repayment. No term extensions are allowed for bonds secured after the 15th anniversary of tax increment provisions. For example, if a TIF was authorized January 1, 2000, it has until January 1, 2015 (its 15th anniversary) to pass bonds secured by future increment to extend the expiration date. Additional bonds may be passed after the 15th anniversary but these would not extend the life of a TIF.

See a complete list of TIF districts.

Please Note:

TIF districts collect the incremental tax revenue from all the local and state mills except the statewide six-mill levy that is used to fund the university system.

Due Dates for Local Governments

August 1

Local governments must notify the department of the name of the proposed TIF district, its contact person, its desired base year, and a preliminary legal description. This must be accompanied by a map illustrating the proposed boundaries of the district if the local government wants the department to provide them with a list of the affected real property, separately assessed improvements, and personal and centrally assessed properties within the district.

December 1

Local governments must notify the department of the name of the proposed TIF district, its contact person, its desired base year and a preliminary legal description. This must be accompanied by a map illustrating the proposed boundaries of the district if the local government does not need the department to provide them with a list of the affected real property, separately assessed improvements, and personal and centrally assessed properties within the district.

February 1st

Local governments must submit formal notification and supporting documentation for the creation or amendment of any TIF district on or before February 1 of the calendar year following the creation or amendment of the district. The required supporting documentation can be found in ARM 42.19.1403 for an Urban Renewal District (URD) and in ARM 42.19.1404 for a Targeted Economic Development District (TEDD).

Please Note:

All notification and documentation for the creation or amendment of an URD or TEDD must be emailed to DORTIFinfo@mt.gov or mailed to the following address:

Department of Revenue
Property Assessment Division
P.O. BOX 8018
Helena, MT 59604-8018

General questions regarding TIF districts can be directed to:

Sherri Diemert
sdiemert@mt.gov
(406) 444-5516

Stacie St. Clair
SSt.Clair@mt.gov
(406) 444-5508

Recommended TIF District Set Up in a County System

A Tax Increment Finance district is always set up as one or more distinct levy districts.

The department recommends setting up TIF districts through a process similar to applying a special district flat fee. Calculate the base and increment percentage for the district as a whole and then apply the base or increment percentage globally to all of the records in the affected TIF levy districts.

Administering the TIF in this way would avoid tax bills with negative increments. It would also ensure that all properties within the TIF district contribute proportionally to the TIF fund.

The following tables demonstrate this concept.

Base Taxable Value is the taxable value from the year designated as the base year in the TIF district documentation.

Example DistrictCurrent Taxable ValueBase Taxable ValueIncrement Taxable Value
TIF Levy District 1Current Year Taxable ValueTaxable Value from the Base YearCurrent Taxable Value minus Base Taxable
TIF Levy District 2Current Year Taxable ValueTaxable Value from the Base YearCurrent Taxable minus Base Taxable
Total TIF DistrictSum of TIF Levy 1 & TIF Levy 2 Current Taxable ValueSum of TIF Levy 1 & TIF Levy 2 Base Taxable ValueSum of TIF Levy 1 & TIF Levy 2 Increment Taxable Value
Increment % to TIF = Total Increment/Total Current Taxable Value
Remaining % to Base = Total Base Value/Total Current Taxable Value

The Increment Percent is applied to each TIF Levy District's Current Taxable Value

TIF Levy District 1 Increment = Increment % × TIF Levy District 1 Current Taxable Value
TIF Levy District 2 Increment = Increment % × TIF Levy District 2 Current Taxable Value
Total TIF Increment = TIF Levy District 1 + TIF Levy District 2

The total TIF increment should also equal TIF Levy 1 + TIF Levy 2 from the table above.

Example:

Tax Increment Finance DistrictLevy District CodeCurrent TaxableBase TaxableIncrement Taxable
TIF Levy District 1T17,980,6874,581,5683,399,119
TIF Levy District 2T23,201,1962,464,904736,292
Entire TIF DistrictT1/T211,181,8837,046,4724,135,411

Increment % to TIF

Increment % to TIF = Total Increment/Total Current Taxable Value
Increment % to TIF = 4,135,411/11,181,883
Increment % to TIF = 36.9831%

Remaining % to Base

Remaining % to Base = Total Base Value/Total Current Taxable Value
Remaining % to Base = 7,046,472/11,181,883
Remaining % to Base = 63.0169%

TIF Levy District 1 Increments

TIF Levy District 1 Increment = Increment % × TIF Levy District 1 Current Taxable Value
TIF Levy District 1 Increment = 36.9831% × 7,980,687
TIF Levy District 1 Increment = 2,951,508

TIF Levy District 2 Increments

TIF Levy District 2 Increment = Increment % × TIF Levy District 2 Current Taxable Value
TIF Levy District 2 Increment = 36.9831% × 3,201,196
TIF Levy District 2 Increment = 1,283,903

Total TIF Increment

Total TIF Increment = TIF Levy District 1 + TIF Levy District 2
Total TIF Increment = 2,951,508 + 1,283,903
Total TIF Increment = 4,135,411

TIF Levy 1 + TIF Levy 2

The total TIF increment should also equal TIF Levy 1 + TIF Levy 2 from the table above.

TIF Levy 1 = 3,399,119
TIF Levy 2 = 736,292
3,399,119 + 736,292 = 4,135,411 = Total TIF Increment

General Setup Process:

TIF Increment Example

Base taxable value is the total taxable value in the TIF district in the year prior to the existence of the district. Incremental taxable value is the taxable value that exceeds the base taxable value for the district in any year. For example, if in the year a TIF is created, the base year and current year taxable value are equal to $1 million, there would be no incremental taxable value and no TIF revenue.

TIF Taxable ValueBase Year
Current Year Taxable Value$1,000,000
Base Taxable Value-$1,000,000
Increment Taxable Value$0
Millage Rate×0.500
TIF Revenue$0

If in the second year of existence of a TIF district, its taxable value grew by $100,000, then the incremental value in that year would be $100,000. If the total millage rate in the TIF was 0.500, the taxes generated from the increment (TIF revenue) would be $50,000.

TIF Taxable ValueBase YearYear 2
Current Year Taxable Value$1,000,000$1,100,000
Base Taxable Value($1,000,000)($1,000,000)
Increment Taxable Value$0$100,000
Millage Rate×0.500×0.500
TIF Revenue$0$50,000

If in the third year of the TIF district, the taxable value shrinks to $800,000, due to property devaluation, demolition or removal of structures, or the like, then the incremental value would be negative ($200,000), meaning there would be no incremental value for the third year. When a TIF district's incremental value is less than zero, no revenue is provided to the district.

TIF Taxable ValueBase YearYear 2Year 3
Current Year Taxable Value$1,000,000$1,100,000$800,000
Base Taxable Value($1,000,000)($1,000,000)($1,000,000)
Increment Taxable Value$0$100,000($200,000)
Millage Rate×0.500×0.500×0.500
TIF Revenue$0$50,000$0

If in the fourth year the taxable value of the TIF grows from $800,000 to $1,200,000, due to redevelopment or the like, then the increment would increase to $200,000. If the millage rate was 0.500, the district's revenue would be $100,000 in this year.

TIF Taxable ValueBase YearYear 2Year 3Year 4
Current Year Taxable Value$1,000,000$1,100,000$800,000$1,200,000
Base Taxable Value($1,000,000)($1,000,000)($1,000,000)($1,000,000)
Increment Taxable Value$0$100,000($200,000)$200,000
Millage Rate×0.500×0.500×0.500×0.500
TIF Revenue$0$50,000$0$100,000

How Taxes Collected are Allocated Example

Whether a property is in a TIF district should not affect the property tax bill, only the distribution of the tax dollars when they are received.

The example shows two properties of equal value belonging to the same set of taxing jurisdictions, one located within the TIF district and one outside. This illustrates how the TIF district would get applied at the individual property level. The taxes collected are allocated differently, but both properties pay the same amount.

Taxing JurisdictionMills Levied
Local Elementary75 Mills
Local High School100 Mills
City99 Mills
County125 Mills
State Wide95 Mills
University6 Mills
Total500 Mills

Property A - In the TIF District

Taxable ValueBase to Taxing Jurisdictions
(Taxable Value × Base %)
Increment Value to TIF Fund
(Taxable Value - Base)
3,0001,8911,109
Local Elementary$141.83$83.18
Local High School$189.10$110.90
City$187.21$109.79
County$236.38$138.63
State Wide$179.65$105.36
University$18.00$0.00
Total$952.15$547.85
Total Taxes$1,500.00 

Property B - Not in the TIF District

Taxable ValueAll to Taxing Jurisdictions
3,0003,000
Local Elementary$225.00
Local High School$300.00
City$297.00
County$375.00
State Wide$285.00
University$18.00
Total$1,500.00

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