TIF
Frequently Asked Questions about Tax Increment Financing (TIF)
What is Tax Increment Financing (TIF)?
TIF is a fiscal tool used by municipalities to support urban development. It reallocates future tax revenue increases (the “increment”) from rising property values into a fund used to finance infrastructure and development improvements in a designated district.
How does TIF benefit real estate developers?
TIF reduces the developer’s upfront financial burden by using future tax revenues to help fund public infrastructure improvements critical to the development. This improves project feasibility and mitigates financial risk.
What is the role of the “increment” in TIF?
The increment is the difference between the baseline property tax revenue before redevelopment and the higher tax revenue generated after the redevelopment. This incremental amount is diverted to fund project-related public improvements.
Can you give an example of how TIF is applied?
In the Downtown Revival Plaza example, pre-development taxes were $100,000 annually. Post-development, taxes increased to $500,000. The $400,000 increment funds public improvements around the project for 20–25 years.
What types of improvements can TIF funds support?
TIF funds are typically used for infrastructure enhancements such as road upgrades, utilities, public space beautification, and other improvements that benefit the redevelopment area and stimulate further private investment.
What are the community impacts of using TIF?
TIF can drive job creation, increase property values, and improve public infrastructure. In the Downtown Revival Plaza case, 500 jobs were expected and 20% of residential units were set aside for affordable housing.
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