Tax Increment Financing (“TIF”) is a method of facilitating development or redevelopment of defined areas of property by utilizing future tax revenues to pay for some of the necessary improvements. TIF allows local officials to designate an area (“TIF District”) for improvement and then earmark any future growth in property tax revenues in that district to pay for the predetermined development expenditures in that district. TIF captures incremental increases in tax revenues without any required change in the tax rates. As property values increase as a result of redevelopment, TIF enables the municipality to capture increased revenue and utilize it to pay for public improvements. It is intended to help local governments, jump-start economically sluggish parts of town or to restore run-down areas. With this tool, local governments can make the improvements needed (like new roads, sidewalks, or sewers), providing incentives to attract businesses or help existing businesses expand, without tapping into general funds or raising taxes. TIFs have become a popular economic development tool to attract new development or redevelop sectors in their communities. In addition to new business, it can also help to retain existing businesses that might otherwise find more attractive options elsewhere. The focus is on overcoming the extraordinary costs that often prevent development and private investment from occurring. Money for infrastructure improvements and other incentives comes from the growth in property tax revenues in that area—the tax increment. Further information and explanations are available on Wikipedia—Tax Increment Financing.

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