Financial Resources
The City of Winsted is committed to assisting with the establishment, growth and expansion of local businesses.
The Winsted Economic Development Authority has a number of financial resources available to assist downtown business and local industry. In this section you will find general information on how economic development projects are funded along with a summary of the financial resources available.
TAX INCREMENT FINANCING
The Winsted Economic Development Authority is willing to consider the use of Tax Increment Financing (TIF) for eligible projects. Tax increment is the difference between a property's original property taxes and the property taxes due on a property after it has been improved. Tax increments can be captured and used to help finance the eligible projects.
In all cases, the proposed project must pass what is called the “but-for” test, meaning that unless Tax Increment Financing is utilized, the project will not be economically feasible. If the project can be done without TIF, then it is ineligible for this type of assistance.
For economic development purposes, two types of Tax Increment Financing districts are available: Economic Development TIF districts for new developments and Redevelopment TIF districts to help with the costs of renovating or replacing substandard buildings.
An Economic Development TIF District is a 9-year district that can provide funds for land acquisition, infrastructure (street, water & sewer, parking, etc.), grading & excavating and / or site improvements. Primarily for industrial-type projects.
A Redevelopment TIF District is a district that can go up to 25 years and will provide funds for the removal of blighting conditions on a lot (sub-standard buildings, site clean-up, etc.).
Eligibility
- The Winsted City Council must hold a public hearing on the proposed project and must approve all TIF Districts.
- Economic Development TIF: Industrial, warehousing, research & development and call centers are eligible.
- Redevelopment TIF
• Proposed district must contain existing “blighted” development
• At least 70% of the area must be occupied by buildings or other improvements.
• At least 50% of the buildings themselves must be substandard, based upon an internal inspection.
• A building is considered substandard if it would cost at least 15% of a new building to bring the existing building up to current building code requirements.
• As long as the above requirements are met, any type of project (commercial, retail, industrial) is eligible.
Requirements
- Economic Development TIF: The district must promote new employment, tax base or retain business in the state.
- Redevelopment TIF: At least 90% of the tax increment generated must be used to correct the blighting conditions.
Rates/Terms
- All TIF districts in the City of Winsted will be set up on a “pay-as-you-go” basis. Tax increments will flow back to the developer in semi-annual payments.
- If the project requires “up-front” financing, a loan may be secured from a private lender, with the projected tax increment being pledged to service the loan.
- Economic Development TIF Districts can provide tax increments for up to 9 years.
- Redevelopment TIF can provide tax increments for up to 25 years.
TAX ABATEMENT
With Tax Abatement, the city rebates its portion of property taxes back to the property owner who then uses it to help offset development and/or redevelopment costs. Tax abatement is simpler and less restrictive than tax increment financing, and is quite useful for smaller projects.
In addition, the availability of tax abatement is limited. In any given year, the City of Winsted can abate an amount equaling no more than 10% of its current tax levy for all economic development projects taking place. The Winsted City Council must approve all tax abatements.
Eligibility
- Tax abatements can be provided for any type of property.
Requirements
- The project must provide one or more of the following public benefits: it must increase or preserve tax base, result in job creation, redevelop blighted areas, and / or provide services not currently available to the residents of Winsted.
Rates/Terms
- Taxes can be abated for up to 15 years (in some instances 20 years).
OTHER FINANCIAL RESOURCES
A number of resources are available to help finance economic development projects. In this section you can access details on program requirements, eligibility criteria, rates, terms and contact information. Click on a link below to navigate to the program information you are interested in.