Tax Increment Financing (TIF) can help communities thrive

TIF incentives demonstrate a level of trust between a municipality and a developer. Municipalities want to spur community growth. Providing TIF incentives involves risk and defers incremental property tax payments (typically available for general governmental use) to the prospect of improving the community through new development projects. However, receiving a TIF incentive is only the first step; how do developers turn TIF into a financial tool for the project’s success?

Monetizing and selling your TIF bonds for accretive value

Typically, obtaining a loan against your bond means additional contributed equity, and holding the bond causes a drag on returns. With Hageman Capital, you get the most for your TIF, up front capital for your project.

A new funding approach

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. If used effectively, it can be an engine that generates growth that would have otherwise not happened without it.

“Tax Increment” refers to the additional, or the incremental taxes, generated from new developments compared to the taxes generated from what was there before (whether vacant land, abandoned buildings, etc.).

Traditional bonds are debt instruments which are sold to an investor for an exchange of returns. However municipalities directly issue single-site TIF bonds to developers on proposed developments within their jurisdiction, to spur construction and place greater requirements on amenities and public infrastructure for the community. These project bonds can be negotiated for parcels and plans that are incorporated within a greater TIF district, or sometimes even on their own. When issuing TIF bonds, municipalities borrow against future cash flow from your projected development based on taxes at completion. The bonds are then paid off by actual taxes from the development project.

Using TIF to make projects feasible

Single site project TIFs are negotiated with the municipality directly, to help foster growth in areas that wouldn’t likely have new development, or development that are substandard, “but for” the creation of the TIF itself. Once a proposed TIF is agreed upon, monetizing your TIF cash flows for upfront project capital can be precarious, and requires the right level of real estate and financial expertise.

Hageman Capital is your partner in TIF monetization

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.

Beyond their professional involvement, Xiao’s relationship-focused approach fostered a collaborative atmosphere. As we look to the future, Hageman Capital has earned a top position on our list, being among the first to explore and assess our upcoming projects.

Christopher W. Myrvold
Chief Financial Officer & Head of Real Estate of 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 of Gershman Partners

Working with Hageman Capital on our Carmel, IN project was a great process. We were able to successfully structure a unique financing arrangement to monetize our real estate tax incentive bonds. Their team took a partnership approach and looked for a win-win solution for both sides. We look forward to our next deal together!

Matt Cremer, Managing Principal of Tegethoff Development

Multifamily projects are community drivers and perfect for TIF

Multifamily developments are key agents to increasing the local property tax base in the future. The volume of new full-time tenants draws greater tax revenue and is positive for the municipality. However, with higher property values and construction costs, developments can stall or struggle to pass feasibility tests. TIF bonds are a local incentive to help developers move forward with construction and further increase residency.

Are you planning a multifamily project where TIF could boost your returns and make the project feasible? Hageman Capital can help project owners align on TIF creation. Contact us to learn more.

Learn about TIF creation

Capital for commercial real estate

Bridge the equity gap of your development

Are you planning a project where TIF could boost your returns and affect project feasibility? Hageman Capital consults with developers to help align on TIF creation, talk with us today for a free consultation.

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How to decrease contributed equity with TIF

Selling your TIF bond instead of obtaining a loan against it decreases contributed equity to the project. Including your TIF bond in your construction loan will increase the cost of the project and increase the amount of capital needed to maintain loan-to-cost ratios, reducing project returns.

Selling your TIF bonds lower developer’s contributed capital. You access millions in additional upfront capital for your project, and generate higher returns.

TIF Monetization