How Do Taxes Factor Into Development Funding
For most facility planners, development funding is always a tricky venture. Not only do you need to find funding for the project, but you need residual funding for your facility once it is complete. For many facilities operating with the aid of their city or town, taxes can factor into development funding. In today’s Sports Facility Advisory post, we’ll look at what role taxes play in your ability to fund your facility and how understanding the tax layout can benefit your facility long-term.
How Do Taxes Impact Development Funding?
While this isn’t always the case, a large chunk of community and recreation centers across the country are, at least in part, funded by the town in which they are located. In many instances, the development funding for the facility will come through proposed taxes on their town or city and the implementation of that tax if it passes.
This can be a confusing topic because the city and town rarely build the facility themselves. Many cities and towns will reach out to a third-party company like SFA to oversee their facility development.
What Taxes Should You Be Aware Of?
Facilities that utilize public development funding strategies should be aware of a few taxes that can be used to help create and operate a facility. The first is a special tax, which is the most consistent when it comes to providing a revenue stream for the facility. A tax is a special tax if its revenues can only be used for a specific purpose, i.e., a recreation or community center. This is the preferable tax for development funding, but it also typically requires higher public support, often needing two-thirds support to be passed.
Another very common development funding tax is a transaction and use tax. This is a tax that essentially turns sales tax into revenue for a particular local project. This can include parks, recreation centers, and community centers.
Are Taxes Our Best Option?
When it comes to development funding, there is no silver bullet. Recreation and community centers will be more dependent on the community, and while they might need a new facility, nobody likes taxes. However, it is certainly an option that you should explore if you are building a town facility. If you are a third-party building a facility, taxes might not be a viable option.
Contact SFA For Additional Funding Consultation
Funding your facility is almost always the most difficult task of facility development. For those building a recreation or community center, taxes might be a legitimate development funding option for your facility. For more information on funding solutions, contact SFA today at (727) 483-7910 or contact us online.