Just what is TIF and how is it used?

Tax increment financing (TIF) is a useful tool to redevelop older, blighted industrial sites in St. Paul. But it faces growing criticism in the face of rising property tax levies.

Three area industrial sites aided by TIF support will have their districts decertified at the end of 2026. The districts are overseen by the St. Paul Port Authority. Combined, the three districts created more than $63 million in additional market value that did not exist prior to these redevelopment projects, demonstrating the power of TIF as a tool for redevelopment, job creation, and tax base growth.

The St. Paul City Council, acting as the Housing and Redevelopment Authority (HRA) Board, is expected to fully or partially decertify four districts by year’s end. Those include Emerald Park, which is near the western city limits.
The HRA Board has spent time this fall reviewing TIF districts and deciding which should and shouldn’t be decertified. Jenny Wolfe, HRA debt administrator, has led the board through the complexities of each district and the pros and cons of early decertification. For example, two TIF districts in Highland aren’t recommended for decertification as both generate revenues that can be used for affordable housing citywide.

TIF is a public financing tool that uses increases in property tax revenue to pay for development-related needs. The HRA and the Port Authority establish districts and then freeze base property value. Extra tax revenue generated through development is then reinvested into project costs.

Decertifying HRA and Port TIF districts and returning land to the property tax rolls is a focus for the fiscal watchdog group In$ight St. Paul. In$ight has asked that as many as 16 districts be decertified and that revenues gained be used to lower tax levies.

The Port announced its decision Oct. 30. “Tax increment financing allows the Port Authority to do the difficult, complex work necessary to clean up and prepare vacant and contaminated sites for redevelopment,” said Todd Hurley, president and CEO of the Port Authority. “These three TIF districts allowed us to attract jobs and tax base that would not have come to St. Paul without strategic public participation, and those investments will continue to benefit the broader St. Paul community for years to come.”

The three districts scheduled for decertification by the end of 2026 are Energy Park Business Center and the Great Northern Business Center Phase 1 (North) and Phase 2 (South).

The Port Authority points out that TIF funding from the three districts spurred private investment that transformed former industrial, vacant, and environmentally challenged properties into thriving business centers that now support approximately 1,175 jobs, host 11 companies, and generate more than $2.3 million annually in property tax revenue.

TIF was used for all three districts for demolition, pollution remediation and public infrastructure. TIF was also used for land assembly at both Great Northern sites.

Longtime area residents might remember when the Koppers Company Coke plant operated in what is now the Energy Park area. The foundry coke and coal tar plant closed in 1979, after producing coal tars and coke for raw steel manufacturing for more than 60 years. It was part of a larger heavy industrial district.

Clean-up required designation as a federal Environmental Protect Agency Superfund site. The nine-acre site Energy Lane Business Center has gone from generating $44,000 in annual property taxes and no jobs to supporting 300 jobs and producing more than $400,000 annually in property taxes, with market value increasing by more than $10 million.

The Great Northern Business Center, in Frogtown and the North End, has ties to railroad magnate James J. Hill and his Great Northern Railroad. But its 1990s-era redevelopment was controversial. Some small businesses and industries there didn’t want to relocate.

Yet there was also community pressure for redevelopment. In 1990, a fire in former St. Paul Foundry/Maxson Steel buildings generated smoke that could be seen for miles. The buildings were being used for paper pellets storage.

What is now Great Northern Business Center Phase 1 (North) is a 21-acre site. Before redevelopment it was occupied by deteriorated older buildings and outdoor storage. It housed 70 jobs and paid $55,000 in annual property tax revenues. Now it is a light manufacturing business center with 580 jobs paying more than $1 million in annual property taxes, with a market value of more than $30.6 million. That is compared to a market value of approximately $822,000 prior to redevelopment.

The Great Northern Business Center Phase 2 (South) is a 13-acre site and former railroad repair and storage facility. By the 1990s it was mostly vacant. It is now a business center with 295 jobs and generating more than $880,000 in annual property taxes, increasing market value by approximately $23.3 million.