Tax Increment Finance: The Edinburgh Experience

Greg WardThe 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 Sustainable Growth

28 September 2010

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

1. CEC finances the delivery ofdevelopment and regeneration

projects

3. The TIF mechanism captures the related incremental business rate

revenues

4. The captured revenuesand income are used to meet

debt repayments

2. Financed projects delivergrowth and enable private

sector development

The ‘Virtuous Circle’

TIF Financial Model©

Base Asset ValueAsset Value belongs to all other assets in project area

Incremental Asset Value

Incremental uplift in property taxable value

belongs to TIF authority to pay project costs

Asse

ssed

Val

ue (A

V)

£

Time5 10 15 20

25 year TIFCreated Terminated

New Post-Project Asset

Value

Total AV now belongs to all

other assets in project area

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 Edinburgh’s Waterfront unlockedunlocked

Is TIF applicable elsewhere?Spatial focus on four Strategic

Investment Zones

West Edinburgh

City Centre Edinburgh Waterfront

South Edinburgh

The Future of TIF

www.investinedinburgh.com