Tax Increment Finance: The Edinburgh Experience Greg Ward The City of Edinburgh Council We have reached the end of the public sector funding road Clear call to arms to promote new models Scottish Context: Public Sector can’t afford it anymore “Westminster cuts to the Scottish Budget have emphasised the importance of finding new funding models to deliver crucial infrastructure projects such as the Edinburgh Waterfront, that can unlock further economic development, whilst ensuring maximum value for the public purse.” John Swinney, MSP Cabinet Secretary for Finance and Why the Waterfront? 307 hectares of mixed use development potential Edinburgh’s TIF Business Case Key Objectives of Tax Incremental Finance Key Objectives of Tax Incremental Finance The Taxation Increment Financing (“TIF”) Mechanism 4. The captured revenues and income are used to meet debt repayments 1. CEC finances the delivery of development and regeneration projects The ‘Virtuous Circle’ 3. The TIF mechanism captures the related incremental business rate revenues 2. Financed projects deliver growth and enable private sector development © TIF Financial Model £ n me t Assessed Value (AV) p rom f V elo v De Incremental A Asset Value d e s Incremental uplift in rea c n I property taxable value belongs to TIF authority to pay project costs New PostProject Asset Value Total AV now belongs to all other assets in project area Base Asset Value Asset Value belongs to all other assets in project area 5 Created 10 15 25 year TIF Time 20 Terminated Key steps in the TIF Development Process TIF Business Case now Finalised Edinburgh’s TIF: Key Assets for Delivery Edinburgh’s TIF: Financial/Economic Appraisal Edinburgh’s Waterfront unlocked Is TIF applicable elsewhere? Spatial focus on four Strategic Investment Zones City Centre Edinburgh Waterfront West Edinburgh South Edinburgh The Future of TIF www.investinedinburgh.com