What is a Tax Increment Financing District (TIF)?

July 30, 2020

A TIF is a public financing method and value capture strategy that is used as a subsidy for redevelopment, infrastructure, and other community-improvement projects or programs in a defined geography. Through the use of TIF, municipalities typically divert future property tax revenue increases from a defined area toward an economic development project or public improvement project or program in the designated geography. TIF subsidies are not appropriated directly from a city’s budget but the city incurs loss through foregone tax revenue as tax revenue for that geography is lock-boxed for that geography and TIF financial plan. Different approaches to making improvements are possible through a TIF as they allow more local government control rather than only what state statutes allow. TIFs are mainly used to make needed investment in neighborhoods through tax relief in areas that require additional and focused improvements than may occur naturally.