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Tax Increment Financing

In Arkansas to determine what property is eligible to be established as a redevelopment district (also known as a tax increment finance district or "TIF" is a three-step process. Only if all three determinations are satisfied can an area be designated a redevelopment district.

STEP 1 - Property must be benefited

The governing body must make findings that the real property within the redevelopment district will be benefited by eliminating or preventing the development or spread of slums or blighted, deteriorated, or deteriorating areas, or discouraging the loss of commerce, industry, or employment, or increasing employment, or any combination thereof. Ark. Code Ann. 14-168-305.

STEP 2 - Property must be in a blighted area

The governing body must make a determination that the boundaries of the proposed redevelopment district are in a blighted area. The definition of blighted area is found in two parts-a general definition and additional, more specific, conditions that qualify as blighted area.

Definition of blighted area

"Blighted area" as an area in which the structures, buildings, or improvements are harmful to the public health, safety, morals, or welfare. The harmful nature of the buildings may be due to any of the following:

  • Dilapidation, deterioration or age or adolescence of the structures;
  • Inadequate provision for access, ventilation, light, air, sanitation or open spaces;
  • High density of population and overcrowding; or
  • Other conditions which endanger life or property. Ark. Code Ann. 14-168-301(3)(A).
Additional conditions which qualify as blighted area

"Blighted area" includes any area:

  • Which substantially impairs the growth of the city, slows down housing development, or is an economic or social liability and is harmful to the public health, safety, morals, or welfare, by reason of any of the following:
    • Presence of a substantial number of deteriorating structures;
    • Defective or inadequate design of streets;
    • Faulty lot layout in relation to size, adequacy, accessibility, or usefulness;
    • Unsanitary or unsafe conditions;
    • Deterioration of the property or structures on the property;
    • Too great a diversity of ownership;
    • Tax on special assessment delinquency which is greater than the value of the land;
    • Defective or unusual conditions of title; or
    • Conditions which endanger life or property by fire or other hazards.
  • That is predominately open, and which because of a lack of accessibility, obsolete platting, diversity of ownership, deterioration of structures or site improvements, or otherwise, substantially impairs or arrests the sound growth of the community. Ark. Code Ann.14-168-301(3)(B).

STEP 3 - Property must meet one of four qualifying criteria

The governing body must make a determination that one or more of following four factors are present within the blighted area:

  1. Property located in the proposed redevelopment district is in an advanced state of dilapidation or neglect or is so structurally deficient that improvements or major repairs are necessary to make the property functional;
  2. Property located in the proposed redevelopment district has structures that have been vacant for more than three years;
  3. Property located in the proposed redevelopment district has structures that are functionally obsolete and cause the structures to be ill suited for their original use; or
  4. Vacant or unimproved parcels of property located in the redevelopment district are in an area that is predominantly developed and are substantially impairing or arresting the growth of the city or county due to obsolete platting, deterioration of structures, absence of structures, infrastructure, site improvements, or other factors hindering growth." Ark. Code Ann. 14-168-305(d).