Value Capture Strategy: Tax Increment Financing (TIF), also known as a Tax Allocation District (TAD), Tax Increment Reinvestment Zones (TIRZ), Redevelopment Agency (RDA), or District Improvement Financing (DIF), is a revenue source that allows infrastructure projects to be funded and/or financed without competing against existing projects and programs and without raising taxes. This is accomplished by pledging a portion of the increased property or sales taxes (increment) generated by new development to finance costs related to the development such as public infrastructure, land acquisition, demolition, and planning. Through its use under Redevelopment, tax increment financing was critical to building infrastructure, revitalizing communities, growing jobs, and aiding the development of affordable housing. The improvements serve a specified area known as a TIF District. TIF Districts have proven that TIF leverages additional private investment that builds and renovates the housing, commercial, and retail space needed to grow jobs and the economy.

FHWA has recently developed a Tax Increment Financing – The Primer designed to provide information to staff at the development authorities that have TIF districts or are considering the use of TIF. The primer provides practical information on what TIF is and examples of how municipalities use them.

Does your community need funding for transportation infrastructure or other public improvements? Tax Increment Financing, or “TIF,” is a financing method used to help fund infrastructure that will catalyze economic development and recover or grow jobs. It uses anticipated future increases in tax revenues to generate incremental tax revenues from a specific development project or projects across a designated district to help pay for current costs associated with development.

To learn more about TIF as it might be a useful tool for your state and local authorities.