How is redevelopment financed?
Redevelopment is primarily financed by tax increment revenue. Other revenue sources include loans, grants and issuance of tax allocation bonds. Typically, agencies use tax increment funds to leverage financial assistance from various agencies of the state and federal governments, and private sources.
The most common method of financing projects within a redevelopment area is a tax allocation bond. These bonds, which are a loan of money to the Redevelopment Agency, are not a debt of the City, community, or the general taxpayer. Rather, they are repaid solely from tax increment revenue generated within the project area. In other words, increased tax revenues generated through redevelopment activities are invested back into the project area to stimulate more development, as well as to pay the costs involved in undertaking redevelopment.
