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Introduction to Tax Increment Financing

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1. Overview of TIF

What is a Tax Increment Financing (TIF)?

Basic TIF Model

Graph by tax revenue and year of TIF

Source: U.S. DOT

TIFs are also called:

  • Tax Allocation District (TAD - GA)
  • Transportation Reinvestment Zone (TRZ - TX)
  • Transportation Reinvestment District (TRID – PA)
  • Community Reinvestment Area (CRA – FL)
  • Economic Redevelopment & Growth Grant (ERGG – NJ)
  • Project Development Financing (PDF – NC)
  • Enhanced Infrastructure Finance District (EIFD – CA)

Overview: Concept behind TIFs

Why TIF?

FUNDING:

  • TIFs raise new funds for infrastructure projects.

BUDGETING:

  • It is assumed that incremental revenue would NOT exist, but for the infrastructure improvement project.
  • TIF revenues and projects are “off-budget.”
  • Thus, TIF projects don’t have to compete against other spending projects nor require tax increases.

Overview: Why use TIFs?

Closing Funding Gaps

Traditional State and local transportation sources: State and local gas taxes, othr taxes and fees. Funding gap, then State and Local Road Improvement Needs.


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