Best Tax Increment Financing Lawyers in North Carolina

About Tax Increment Financing Law in North Carolina, United States

Tax Increment Financing, commonly known as TIF, is an economic development tool that helps local governments fund public infrastructure and community improvement projects. In North Carolina, TIF allows cities, counties, and municipalities to borrow funds for developments by pledging future increases in property tax revenues that are generated from the rise in property values within a designated area, known as a TIF district. The goal is to stimulate private investment in underdeveloped or blighted areas, improve public facilities, and encourage economic growth. North Carolina's approach is regulated and structured under specific laws, making legal compliance essential in every step of the process.

Why You May Need a Lawyer

Legal guidance is especially important when dealing with Tax Increment Financing in North Carolina. Some common situations where a lawyer can help include:

• Understanding the complexities of TIF statutes and how they apply to your project
• Navigating approval and public hearing processes required for establishing a TIF district
• Drafting or reviewing development agreements between public bodies and private developers
• Identifying risks and negotiating loan terms tied to TIF bonds
• Challenging a denial of TIF funding or defending against a legal challenge to a TIF project
• Ensuring compliance with state and local regulations governing the collection and use of increment revenue
• Advising local governments, developers, or community groups on their legal rights and responsibilities

Because TIF law intersects with tax law, municipal law, and real estate, having a lawyer ensures all interests are protected and statutory requirements are met.

Local Laws Overview

Tax Increment Financing in North Carolina is established under the “Project Development Financing Act,” found in Chapter 159, Article 6 of the North Carolina General Statutes. Here are some key aspects:

• Only local governments (cities or counties) can initiate TIF projects and issue TIF bonds.
• The district must meet requirements regarding blight, underdevelopment, or the potential for economic development.
• Public hearings and written findings are required before approving a TIF district.
• TIF bonds do not require voter approval, but state oversight includes review by the Local Government Commission.
• TIF revenues are generated only from the increase in property tax value in the designated area after development occurs; the original base value is preserved for existing taxing entities.
• Funds from TIF can only be used for qualified public projects, such as roadways, water and sewer, or public buildings, not directly for private businesses.
• North Carolina imposes limitations on the amount of debt that can be secured through these bonds and on how the funds can be spent.

The process to establish a TIF district is stringent and subject to community involvement as well as state and local oversight.

Frequently Asked Questions

What is Tax Increment Financing?

Tax Increment Financing is a method municipalities use to fund public improvements by borrowing against future increases in property taxes due to rising property values within a specific area.

Who can create a TIF district in North Carolina?

Only local governments, such as cities and counties, can establish TIF districts under North Carolina law.

What are TIF bonds?

TIF bonds are municipal bonds issued by local governments to finance qualifying public improvement projects, with repayment made from the increased property tax revenues generated by the TIF district.

How does North Carolina regulate TIF projects?

All TIF projects must comply with the state’s Project Development Financing Act, requiring public hearings, feasibility studies, and approval by the Local Government Commission.

What types of projects can TIF funds be used for?

TIF funds can be used for infrastructure projects such as streets, utilities, public buildings, and other public improvements, but not directly for private development costs.

Does establishing a TIF district require voter approval?

No, but the Local Government Commission must approve the issuance of TIF bonds, and the process involves significant public participation and transparency.

How does TIF affect other taxing districts?

The original property tax base in the TIF district continues to support existing taxing entities, while the incremental increase is used to repay the bonds.

Can TIF be used for affordable housing projects?

Yes, if affordable housing projects include eligible public improvements as defined by state law, TIF may support such developments.

What role do developers play in TIF projects?

Private developers can partner with local governments to complete developments within TIF districts, but they cannot initiate the process or receive direct TIF funds for private expenses.

Why is legal advice important in the TIF process?

Legal complexities, public oversight, compliance requirements, and financial risks make professional legal advice crucial for both public entities and private developers considering TIF projects.

Additional Resources

Several organizations and agencies provide information and guidance on Tax Increment Financing in North Carolina:

• North Carolina Department of State Treasurer, Local Government Commission
• UNC School of Government
• North Carolina League of Municipalities
• Office of State Budget and Management
• Local city and county planning or economic development offices

Consulting these resources is helpful before pursuing a TIF project or seeking legal assistance.

Next Steps

If you believe Tax Increment Financing may be appropriate for your community or project, or if you are encountering legal issues related to TIF, consider the following steps:

• Contact an attorney experienced in municipal finance or economic development law in North Carolina
• Gather documentation about your project and its location, including maps, financial projections, and intended improvements
• Review the procedural requirements under North Carolina law with your attorney to ensure compliance from the outset
• Attend local government meetings or reach out to economic development officials for insight into current TIF opportunities or policies
• Maintain transparency and communication with all stakeholders throughout the TIF process

Taking these structured steps will improve the likelihood of success and legal compliance for your Tax Increment Financing project in North Carolina.