Tax Increment Financing (TIF)
Tax increment financing is a public-finance tool that uses future property tax revenue increases (the 'increment') from a designated district to fund current infrastructure or development incentives.
What it means
A local government designates a TIF district, freezes existing property tax revenue as the baseline, and dedicates incremental tax revenue above the baseline to pay for infrastructure improvements, public bonds, or developer incentives within the district. The theory is that the district's redevelopment generates the increment, which pays for the improvements enabling the redevelopment.
TIF is widely used in urban redevelopment, mixed-use development, and industrial park creation. CRE buyers in TIF districts should verify the specific incentive structure — some properties receive property tax abatements or rebates funded through TIF.
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