INCENTIVES
Tax Increment Financing
Rapid City will rebate the tax
increment, or increase, created by your investment in real property
for up to 15 years. State law now restricts the use to industrial
projects only.
An example of tax increment would
be the increased value of the existing tax basis as a result of
construction of a building on undeveloped land. Real estate taxes
are calculated at approximately 2.7% of the assessed value of the
real estate. Let's assume that land is valued at $100,000 prior
to construction. The addition of a $1,000,000 building to that land
would increase the value of the property by $1,000,000 to $1,100,000.
The taxes on that $1,000,000 increase in value, under the tax increment
financing mechanism, is rebated to the developer approximately two
months after each payment for up to 15 years. This revenue stream
can then be pledged to a lender for debt service on money's borrowed
to purchase land and pay for site improvements and some qualified
construction expense.
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