Codington County Officials Debunk TIF Myths: “No Tax Dollars Are Being Taken”

Northeast Radio SD News – Watertown, SD - As affordable housing remains a top priority for Watertown, Codington County Commissioners used their March 10, 2026, meeting to clarify the controversial financing tool known as Tax Increment Financing (TIF).

 Responding to a wave of recent public inquiries and confusion, the Commissioners and the Director of Equalization provided an in-depth explanation of how these districts affect local taxpayers.

Addressing the Misconception

The primary concern among residents has been the fear that TIF districts “siphon” existing tax revenue away from vital county services to fund private development.

 Director of Equalization Shawna Constant explained that a TIF essentially “freezes” current tax revenue for a period—usually 20 years—and uses only the newly created value to pay for project costs.

“TIF districts are meant to bring and keep new people coming here,” Constant explained. “It’s very important to know that it is not taking any tax dollars away from us. We still get the tax on that land, but whatever the value of those improvements are—the buildings themselves—that increment is what goes to pay back the loan.”

How the Mechanics Work

Constant detailed the life cycle of a TIF for the board:

·         The Base Value: Before a project begins, the county establishes a “base value” of the land. The tax revenue from this base continues to flow to the schools, townships, and the county as it always has.

·         The Increment: Once new construction occurs (such as the current apartment building projects in Watertown), the property value rises. The taxes collected on that increase in value (the increment) are used to pay off the developer’s infrastructure loans.

·         The Sunset: After the loan is paid off—typically within 20 years—the TIF “sunsets,” and 100% of the new, higher tax revenue flows into the county’s general fund.

The “Candy” Critique

Commissioner Myron Johnson noted that some in the public feel the city has been “handing TIFs out like candy on Halloween.” However, emphasized that without these incentives, many housing projects would not be financially viable in the current economic climate.