Legal Definitions - tidewater

TIF stands for Tax-Increment Financing.

Tax-Increment Financing (TIF) is a public funding mechanism used by local governments to encourage redevelopment or new development in specific areas. It works by designating a particular geographic area as a "TIF district." The property tax revenue generated from this district is measured at a baseline before any new development occurs. As new development or redevelopment takes place, property values typically increase, leading to higher property tax revenues. The "increment" – which is the difference between the new, higher tax revenue and the original baseline revenue – is then captured and dedicated to funding public improvements or infrastructure within that same TIF district, rather than going into the general fund. This allows the future growth in tax revenue to pay for the upfront costs of projects that are expected to stimulate that growth.

• Example 1: Urban Revitalization

  A city council identifies a neglected downtown block with several vacant buildings and aging infrastructure. To spur revitalization, they establish a TIF district for this specific area. A developer then proposes to convert the vacant buildings into mixed-use residential and retail spaces, and the city plans to improve public sidewalks and street lighting. The property values in the district significantly increase after the development. The additional property tax revenue generated by these higher values (the "increment") is then used to pay for the new sidewalks, streetlights, and other public amenities within that revitalized downtown block, rather than immediately going into the city's general budget.

• Example 2: New Industrial Park Development

  A rural county wants to attract new manufacturing businesses and create jobs. They designate a large, undeveloped parcel of land near a highway as a TIF district. To make the land attractive to businesses, the county needs to extend water and sewer lines, build new access roads, and install utility infrastructure. Once a manufacturing plant is built on the site, its high property value generates substantial new property tax revenue. The "increment" from these new taxes is then used to repay the bonds or loans taken out by the county to finance the initial infrastructure improvements, effectively using the future economic growth to fund its own enablers.

• Example 3: Community Recreation Center

  A growing suburban community needs a new recreation center, but the municipal budget is tight. The city council decides to create a TIF district around a new, large-scale housing development that is currently under construction. As homes are completed and sold, the property values in the district rise considerably. The increased property tax revenue (the "increment") from these new homes is then specifically allocated to fund the construction and initial operating costs of the new community recreation center, which will serve the residents of the new development and the wider community.