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A CRA is financed through Tax Increment Financing (TIF). Tax Increment Financing is not increasing the property taxes within the Community Redevelopment District (CRA). It is rather changing the distribution of the property taxes.
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The Feasibility Study is intended to document conditions existing within the proposed Community Redevelopment Area (CRA) that indicate the presence of blight. A summary of blight conditions within the Lynn Haven CRA area has been published in the CRA Feasibility Study for the City of Lynn Haven; April 2003:
CRA Feasibility Study for the City of Lynn Haven
Assessed values of real property for ad valorem tax purposes are low compared to Lynn Haven as a whole and compared to other surrounding municipalities and Bay County. As a first step of the process, the City has to prepare a CRA Feasibility Study to evaluate the potential for including a portion of the City in a Community Redevelopment Area pursuant to Section 163, Florida Statutes.
Local governments are able to designate areas as Community Redevelopment Areas (CRA) when certain conditions exist. Since all the monies used in financing CRA activities are locally generated, CRAs are not overseen by the state, but redevelopment plans must be consistent with local government comprehensive plans. Examples of conditions that can support the creation of a Community Redevelopment Area include, but are not limited to:
To document that the required conditions exist, the local government must survey the proposed redevelopment area and prepare a Finding of Necessity. If the Finding of Necessity determines that the required conditions exist, the local government may create a Community Redevelopment Area to provide the tools needed to foster and support redevelopment of the targeted area. The ultimate goal of a CRA is to increase the taxable value within the CRA through specific projects as outlined in the CRA Plan.
The Community Redevelopment Plan typically includes the overall goals of the Community Redevelopment Agency (CRA), as well as specific projects for that area. The Community Redevelopment Agency is responsible for developing and implementing such a plan (PDF) that addresses the unique needs of the targeted area. The Redevelopment Plan is based on the findings of the CRA’s Feasibility Study. It is a living document that can be updated to meet the changing needs within the CRA. However, the boundaries of the area cannot be changed without starting the process from the beginning.
The Community Redevelopment Agency (CRA) is funded through Tax Incremental Financing, also known as TIF. TIF money is used to promote private sector activities. The taxable value of all real property within the CRA area is determined as of a fixed date, the base year.
The local Community Redevelopment Agency (CRA) Board decides how to spend the CRA funds based upon staff recommendations.
Tax Increment Financing (TIF) is a local government tool that uses future gains in taxes to finance current public improvements. Improvements that theoretically will create those gains. When a public project such as a road, park, or constructing a sidewalk is carried out, there is often an increase in the value of surrounding real estate, and perhaps new investments (new or rehabilitated buildings, for example).
This increased site value and investment sometimes generates increased tax revenues. The increased tax revenues are the tax increment. Tax Increment Financing dedicates tax increments within a certain defined district (i.e. the Lynn Haven Community Redevelopment Agency (CRA)) to finance debt issued to pay for the project.
TIF is designed to channel funding toward improvements in distressed or underdeveloped areas where development might not otherwise occur. TIF creates funding for public projects that may otherwise be less affordable to localities. Any funds received from a Tax Increment Financing area must be used for specific redevelopment purposes within the targeted area, and not for general government purposes.