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This interactive tool will create an estimate of tax revenues your community may receive and capture as a result of new private investment within a DIF District. It is intended to help you:
Understand the potential for DIF to encourage and capture new tax revenues that result from new private investment;
Allocate these new tax revenues between the General Fund and a DIF Development Program of public investment, and review the cashflow effects of that allocation; and
Provide a simple estimate that can be printed and shared with others interested in the potential for DIF in your community.
This is not intended for use in creating the revenue estimates and financial plan required for legislative adoption of a DIF District and Development Program. Please see the DIF Guide and DIF Template for information about these requirements.
Estimated DIF Revenues
Year
End of Fiscal Year
Tax Revenue
Deposit to General Fund
DIF Revenues
Cumulative DIF Revenues
Tips for Using the DIF Estimator
"DIF District created in (YYYY)" is the calendar year in which you might adopt a DIF. The DIF Estimator will calculate the Base Date, as defined by statute, as the January 1 of that year. The Base Date is the date at which assessed values are established. Increases to assessed value resulting from new private investment can generate DIF Revenues.
The recognition of increases to assessed value and the tax revenues generated by those increases follow your existing assessment calendar. The first fiscal year in which you will have DIF Revenues is two years after the adoption of your DIF. For example, a DIF adopted in calendar 2019 will have revenues available for capture in FY 21 (the fiscal year ending June 30, 2021).
"Local tax rate" can be your current rate, or the rate you expect for the first year you will have revenues to be captured (two years after adoption.) If you have tax rates for different types of property, you may want to run this DIF Estimator for each type of property in the area where you expect to encourage growth.
"Estimated increase in assessed value" -- To keep this DIF Estimator simple, the default assumption is that all increases to assessed value are allocated equally over a five-year period, in recognition of the fact that in an actual DIF District, private investment will occur, and increases in assessed value will accrue and generate revenue, over time. When you enter an amount, the DIF Estimator will divide it equally over five years, beginning are assumed to occur in the first calendar year after the adoption of DIF. For example, a $1 million increase in assessed value will assume $200,000 in each of the first five years of the DIF District, and no increases thereafter. DIF Revenues will therefore be shown to increase in each year for the first five years, and then remain level. Please note that allocating increases in assessed value over five years will require that the term of the DIF District be at least five years.
If it is known that the entire estimated increase in assessed value will occur in the first year, a user may check the box labeled "Allocate in Year 1."
Communities that recognize new growth between each January 2 and June 30, and assess that new growth as of the January 1 of that year (sometimes referred to as "653 Communities") may use this DIF Estimator exactly as any other community; estimate your increases to assessed value and consider them to have occurred on January 1.
DIF Revenues are derived only from the increases in assessed value resulting from new private investment. Market factors and revaluations do not generate the incremental increase in assessed value which generates DIF Revenues, which generate DIF Revenues.
For "Annual % of tax revenue captured," there is no standard or best practice for the amount of revenue to be captured by DIF. Communities using the tool have captured different percentages depending on their expected needs. This tool allows you to adjust your amount to be captured for two periods; a full financial plan can include a customized schedule for revenue to be captured, or even a formula. See the DIF Guide for more information.
For "Annual growth in tax rate," you may project a steady tax rate increase, or you may hold the rate steady by entering zero (0) in this field.
Methodology
This DIF Estimator calculates the tax revenues that are available for capture in a DIF District according to the provisions of Massachusetts General Laws Section 40Q, and the state's assessment calendar.
This DIF Estimator:
Establishes the Base Date as defined in the statute, which is the January 1 immediately preceding the date the DIF District is estimated to be adopted.
Projects the number of fiscal years during which you will capture DIF Revenues based on your selection of a DIF Term in years. The DIF Term will begin on the first fiscal year in which DIF Revenues will be collected, which is two years after adoption of your DIF. In the output, the column "Year" shows the number of years in which revenue will be collected. The column "End of Fiscal Year" shows the fiscal years, ending June 30, in which DIF Revenues will be collected.
Assumes that increases in assessed value will occur equally over five years. For example, a $1 million increase in assessed value will assume $200,000 in each of the first five years of the DIF District, and no increases thereafter. DIF Revenues will therefore be shown to increase in each year for the first five years, and then remain level.
The user may choose to check the box labeled "Allocate in Year 1" if it is known that the entire estimated increase in assessed value will occur in the first year.
Divides the increases in assessed value by $1,000 and multiplies by the tax rate you entered, to reflect that the rate is per $1,000 of value. If you entered a tax rate growth factor, the tax rate will increase by that percent each year. The column "Tax Revenue" shows the results for each fiscal year.
Allocates the tax revenues to the General Fund or to DIF Revenues according to the Annual % of tax revenues captured by DIF that you entered for the years 1-10 and 11-end. The % to be captured is multiplied by the total tax revenues, and this amount appears in the column "DIF Revenues." All tax revenues not captured (100% less your entry) are shown in the column "Deposit to General Fund."
Shows the accumulation of DIF Revenues over time in the column "Cumulative DIF Revenues." This column adds each successive year's DIF Revenues and the last fiscal year shows the total allocated for the term of the DIF.
Is for education and estimation purposes only and is NOT intended for use in creating the revenue estimates and financial plan required for legislative adoption of a DIF District and Development Program. Please see the disclaimer above and the 'DIF Guide' and 'DIF Template' for information about these requirements.
