You’ve probably heard the term “TIF” mentioned as one of the ways the City plans to help pay for the Downtown Event and Entertainment District. Since it’s one of the financing tools being considered, and as I keep getting questions about it, here’s what it actually is and where we need to consider it’s limitations.
TIF stands for “Tax Increment Financing” and it captures the growth in property tax revenue from a defined area. So not existing revenue, only new revenue created by rising property values after redevelopment. The City compares a property’s assessed value before the DEED area is developed to its value after, and the difference (the “increment”) gets redirected to financing the project instead of flowing into general revenue.
The appeal is obvious. In theory, a city funds a major project using tax dollars the development itself generates, instead of raising rates on everyone. The catch is in the word “increment”, so it only exists if property values actually rise the way the model assumes, and it only shows up as new assessments phase in over years, not up front.
From what I can find so far, the numbers are likely softer than expected. A 2023 KPMG analysis found the total annual revenue potential across five funding tools (TIF plus things like facility fees, accommodation taxes, and parking revenue) ranges from $6.7M to $21.4M, with a $13.5M mid-point.
But in their report, KPMG’s own table footnote says the estimate assumes the education and library portions of the tax bill are included in the TIF. That’s a significant problem because the City doesn’t have legal authority to touch those, only the municipal portion.
So, if we strip those components out, and KPMG’s own numbers show the real, currently-legal total drops to roughly $11.4M a year, not $13.5M. In other words, the number usually quoted publicly already assumes a legislative change that hasn’t happened and that the Province has given no indication it will make.
Why that matters is roughly a third of every property tax bill in Saskatchewan goes to education. Politically, it’s hard to see Saskatchewan handing that portion to Saskatoon for an entertainment district when there’s already a strong public sentiment that education itself is underfunded. So this isn’t a technicality, it’s a real ceiling on what TIF can ever generate for this project, and over 25 years it amounts to $52M less revenue unless the Province allows the City to have those funds as well.
As well, the TIF revenue is backloaded, so the bulk shows up late in the 25-year timeline, not in the early years.That gets worse when you factor in the City’s standard five-year tax abatement for new development, currently phased at 100% / 80% / 70% / 60% / 50%. If that incentive continues in the DEED zone, it pushes new TIF revenue back even further, while debt payments on the project still come due on schedule. Someone has to cover that gap in the meantime.
So, what’s changed since 2023:
– The Province has prioritized DEED for provincial cost-matching against federal infrastructure funding (up to one-third of eligible costs) but so far there’s no federal commitment
– The City signed an MOU with Muskeg Lake Cree Nation to explore a partnership, which Mayor Block has said could change the funding math
What hasen’t changed is the revenue projections from the 2023 KPMG figures, and the inflationary reality of capital projects. That gap alone is a reason we need updated numbers!
This is exactly the gap my Aug. 26 motion is designed to close. We need a detailed, up-to-date plan showing how the City’s share gets funded responsibly, while keeping the promise that ratepayers won’t be on the hook. I’d also expect MLCN would want to see that same plan if they’re considering a partnership with the City.
Otherwise, using a TIF is a legitimate tool and has been used successfully elsewhere. But it isn’t free money, it isn’t fast money, and under current law it can’t touch the education portion of the tax bill. Even KPMG’s own figures show the achievable amount is lower than the number usually quoted, so any public accounting of DEED’s finances needs to show TIF for what it is, which is a partial, back-loaded, assumption-dependent revenue stream, not a guarantee that this project pays for itself.