Tax Increment Financing (TIF)

Tax Increment Financing (TIF): Tax Increment Financing is a public financing method used by municipalities to subsidize community-improvement projects. The financing for these projects is based on future property tax revenues resulting from increased assessed values due to new development or redevelopment.

Here's how it works: The local government sets a defined area or district for the TIF program, often in areas needing economic revitalization. The current property tax revenue within that TIF district is determined and set as a baseline. As redevelopment or new development takes place within the TIF district, it theoretically increases the property values and, therefore, the amount of property taxes collected. The increment, or increase, in property tax revenues above the baseline amount is then set aside in a fund to finance improvements within the TIF district.

TIF can be used for various purposes, such as infrastructure development, public or community projects, or other improvements meant to encourage economic growth. However, the specific uses for TIF and the rules governing its application can vary widely by jurisdiction. It's important to note that while TIF can stimulate economic development, it's not without controversy. Some critics argue that it diverts public funds from wider public needs, like education or public safety, to benefit private development.