District Improvement Financing (DIF)
Through District Improvement Financing (DIF), a town or a city can establish a funding stream for economic development activities that is linked to, and derived from, the results of economic development. DIF is a locally enacted tool that enables a municipality to identify and capture incremental tax revenues from new private investment in a specific area and direct them toward public improvement and economic development projects. DIF is not a new tax or special assessment and it does not increase a municipality’s tax rate.
A DIF Guide and accompanying resources have been created to help towns and cities in Massachusetts evaluate whether DIF is an appropriate tool for their economic development goals.
These resources provide further information, examples, and technical advice about assembling a DIF and creating a path to adoption and implementation.
DIF Resources
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DIF Tools
DIF Estimator
This interactive tool creates an estimate of tax revenues that your community may receive and capture as a result of new private investment within a DIF District.
Capital Mix Estimator
The Capital Mix Estimator is intended to help a user formulate and consider questions about the use of DIF with other funding sources, including:
- What is the estimated remaining gap when all estimated costs and revenues are considered?
- What amount of DIF Revenue is further needed to fill the gap (assuming it can be increased by increasing new growth expectations or the increment captured, etc)?
Instructions for the Capital Mix Estimator
Download the Capital Mix Estimator
Template
This DIF Template has been created as part of the suite of resources to help communities understand and use DIF effectively. It is structured to gather and present the information required by the DIF Statute to be included in each of the four components of DIF, including the Development District, Invested Revenue Development District, Development Program, and Invested Revenue District Development Program.
Instructions for the DIF Template
Why use DIF?
DIF can be integrated with, and can complement, existing economic development efforts. Through DIF a municipality can:
- Communicate that a district is targeted for growth and outline a community’s goals
- Establish greater local control by identifying the location and type of development desired
- Fund "soft" costs and planning or outreach efforts that may not be suitable for borrowing
- Create a written plan for public improvements and estimated economic outcomes
- Continue to use existing tools such as grants and borrowing as part of a broader toolkit
District Improvement Financing also provides additional flexibility in structuring a financing supported by DIF revenues.
A municipality may structure its debt to match debt service payments with projected cash flows. For example, rather than using a level debt service schedule, a municipality could issue bonds that defer principal, capitalize interest, or mirror the forecasted revenue stream with an ascending debt schedule.
In addition, the associated debt from a DIF-supported financing may be structured to not count towards a municipality’s debt limit. It is critical for a municipality to consult with an independent municipal advisor or bond counsel about issuing DIF-supported debt so the pros and cons can be weighed, including potential impacts to credit rating and short/long-term fiscal impact.
Case Studies
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Additional Resources
- Town of Dedham - DIF Warrant Article
- Town of Easton - DIF Warrant Article
- Town of Easton - DIF Consultant RFP
For more information, contact:
Claire O'Neill, SVP Real Estate Planning
Direct: 617-595-9430
Email: coneill@massdevelopment.com
