What statutory steps and approvals are required for a local authority to establish a Tax Increment Financing scheme in Ireland?

In Ireland, Tax Increment Financing (TIF) does not exist as a standalone statutory product in the same way it does in the US or UK. Instead, local authorities utilize "TIF-style" mechanisms primarily through Section 49 Supplementary Development Contribution Schemes under the Planning and Development Act 2000 (as amended).

These schemes allow a local authority to ring-fence a specific area where developers must pay an additional levy to fund specific public infrastructure (e.g., a bridge, rail line, or road network) that directly benefits that area.

Statutory Steps for a Local Authority
To establish a Section 49 scheme, a local authority must follow a rigorous statutory process that is a "reserved function" (meaning it requires a vote by elected councillors, not just the executive).

Preparation of Draft Scheme: The Council executive prepares a draft scheme identifying the specific infrastructure project(s), the "benefiting area" (the geographic zone where the levy will apply), and the estimated cost.

Public Consultation: The draft scheme must be published for a statutory period (typically 6 weeks), inviting submissions from the public and developers.

Chief Executive's Report: The Chief Executive reviews all submissions and prepares a report for the elected members, summarizing the issues raised and recommending any amendments.

Adoption by Council Vote: The elected members (Councillors) vote to adopt the scheme. Once adopted, the levy becomes a mandatory condition on all relevant planning permissions within that area.

Borrowing Sanction (Crucial for TIF model): If the infrastructure is to be built upfront using borrowed money (to be repaid later by the levies), the local authority must obtain borrowing sanction from the Department of Housing, Local Government and Heritage (and potentially the Department of Finance). This is often the hardest hurdle, as the State closely controls local government debt.

Risks for a Private Investor
If you are a private investor (e.g., a financier or a developer entering a Public-Private Partnership) looking to fund the infrastructure upfront in exchange for future repayment from the scheme, you face distinct risks compared to a standard sovereign bond or corporate loan.

Financial Structure Example
A common Irish model for this is not a pure private-led TIF but a hybrid:

Step 1: The Local Authority secures a Section 49 Scheme to legally capture the value.

Step 2: The State provides "gap funding" via the Urban Regeneration and Development Fund (URDF) or LIHAF to make the project bankable.

Step 3: The Local Authority borrows the balance (or partners with a private entity) to build the infrastructure.

Step 4: As private developments complete, they pay the Section 49 levy, which is used to repay the loan or recoup the state grant.

Recommendation: As an investor, you should verify if the scheme allows for "works in lieu" agreements. This allows a developer to build the infrastructure themselves and offset the costs against their future levy liabilities, effectively removing the "middleman" payment risk of the local authority.