Tax Increment Finance Districts (TIF)

 - An Overview -
WHAT IS A TAX INCREMENT FINANCE DISTRICT (TIF)?
A TIF is a special tax district used to promote commercial and industrial development.
WHAT DOES A TIF DO?
A TIF provides financing for public improvements (sewer, water, roads, etc.) using new tax revenue created by new, expanded, or renovated commercial property in a TIF district, which is defined by the community.  A TIF district can be undeveloped land, a Main Street district, the whole downtown, a few parcels – whatever the communities chooses.
HOW DOES A TIF WORK?
After defining the TIF district, the current assessed values and taxes are set as a baseline.  Any increase in property values within the district (through new construction, expansion, or renovation) will result in an “incremental” increase in taxes above the baseline.  All or part of this increase is used to pay for infrastructure improvements (sewer, water, roads, etc.) within the district.
A TIF CAN BE A “WIN-WIN” FOR RESIDENTS AND BUSINESSES
For residents
: A TIF can encourage commercial and industrial development in the community.  Once the public improvements in the district have been paid for, the increased tax revenue generated by the new development becomes part of the Town’s general revenue.  With a TIF, these improvements can be made at no cost to other tax payers. 
For businesses: A TIF can provide an attractive mechanism to pay for infrastructure improvements necessary for business construction, expansion, or renovation.  Without a mechanism in place such as a TIF to fund these necessary infrastructure improvements, a business may chose to locate or expand in another community.  Businesses want to locate in a “town with a Plan”.