Monetization
Monetization, holding, and the cost of each
Borrowing against a TIF bond requires additional sponsor equity. Holding it creates a drag on returns, because bond yields sit below project yields. An outright sale avoids both.
- No additional contributed equity
- Upfront capital instead of a drag on returns
TIF Basics
Tax Increment Financing basics
TIF is a powerful tool for local development and has incentivized billions in new community projects, revitalizing cities and towns across America. Used effectively, it generates growth that would not have happened without it.
What “tax increment” means
The additional — incremental — taxes generated from new development compared to the taxes generated from what was there before, whether vacant land or abandoned buildings.
How TIF bonds are issued
Municipalities issue single-site TIF bonds directly to developers on proposed developments, borrowing against future cash flow from the proposed development. The bonds are then paid off by actual taxes from the project.
Making projects feasible
Single-site project TIFs foster growth in areas that would not see development “but for” the TIF itself. Once the incentive is agreed, monetizing the cash flows requires real estate and financial expertise on both sides of the transaction.
Developer perspectives
Hageman Capital was an integral partner of Buckingham for our Carmel Midtown AT&T project. They actively engaged in the process and identified potential pitfalls. Their contribution extended to generating creative solutions within the team and legal framework. As we look to the future, Hageman Capital has earned a top position on our list.
Christopher W. Myrvold, CFO & Head of Real Estate, Buckingham
Working with Hageman Capital to finance TIF bonds was a great experience, they made the process simple and transparent. We appreciate their partnership and willingness to solve complicated issues fairly and quickly.
Fede Boscaini, Director of Development & Finance, Gershman Partners
Multifamily
Multifamily and the local tax base
Multifamily developments expand the local property tax base. New full-time residents generate greater tax revenue for the municipality — but higher property values and construction costs can stall feasibility. TIF gives municipalities a direct incentive to move multifamily construction forward.
- Outright purchase of TIF and incentive bonds at competitive valuations
- Flexible structuring across the capital stack, from senior to gap funding
- Decisive diligence — most valuations returned within days, funded in weeks
- Discretion and continuity from first call through closing
Contributed Equity
Contributed equity and how TIF reduces it
Folding a TIF bond into the construction loan raises project cost and the equity needed to hold loan-to-cost ratios, which reduces returns. An outright sale lowers contributed capital instead.
- Upfront capital at construction loan closing
- Higher returns on lower contributed equity
Capital for Commercial Real Estate
Closing the equity gap.
Hageman Capital advises developers on TIF creation as well as monetization, including projects where the incentive has not yet been negotiated. Initial consultations carry no cost.