Is a City Revitalization & Improvement Zone the same as a tax-increment financing district?

One in a series explaining key terms and concepts of Pennsylvania government. Today’s topic: the City Revitalization & Improvement Zone, part four of six.

Seeking a better understanding of Pennsylvania’s issues and proposed solutions? Sometimes, complicated jargon and concepts can get in the way. That’s why we started Explainers, a series that tries to lay out key facts, clarify concepts and demystify jargon. Today’s topic: City Revitalization & Improvement Zone, part four of six.

Is a CRIZ the same as a tax-increment financing district?

No.

Tax-increment financing (TIF) districts work off a similar concept: finance development by borrowing money repayable with the extra taxes generated by that development.

The main differences include:

• TIF program guidelines specify environmental remediation as an eligible cost paid by those additional taxes. CRIZ rules do not – although site clean-up costs might qualify if essential to redevelopment there.

• State officials require local leaders to demonstrate blight or pollution in an area where they want a TIF district, but don’t with a CRIZ.

• The state says it intended to benefit smaller communities through the TIF program; the CRIZ program is mainly intended for cities with populations over 30,000.

• A TIF utilizes only all additional local property taxes to pay debt. CRIZ revenue does not include local property taxes, but does include other local and state taxes with few exceptions.

• CRIZ obligations are issued by the zone’s contracting authority, which typically is created specifically for the CRIZ designation.

• Municipal authorities or the state issue TIF debt, and the state guarantees it, up to $5 million per project or $100 million statewide through its Commonwealth Financing Authority, or Pennsylvania Economic Development & Financing Authority.

• The state will pay bondholders if CRIZ revenues aren’t enough, but will seek reimbursement from any future CRIZ revenues available after debt repayments. If the state’s not repaid in full by the time bondholders are, taxpayers in the CRIZ host community have to make up the difference.

Did this article answer all your questions about the City Revitalization & Improvement Zone? If not, you can reach Emily Previti via email at emily_previti@witf.org or through social media @emily_previti. Have a topic on which you’d like us to do an Explainer? Let us know in the comment section below, or on Twitter @PaCrossroads.