Tax-Increment Financing (TIF)
Tax Increment Financing (TIF) is a public financing model used by many cities to fund infrastructure, redevelopment, and community-improvement projects. Among other uses, this model can also be used to create economic development through loans to property owners to implement efficiency-related improvements to their property. Building owners agree to a higher tax assessment based on the increased property value that occurs as a result of the project.
Many cities implement a TIF by designating a specific area – such as a downtown area – so that owners of buildings located in those areas would be eligible for the financing. The terms of TIF eligibility may be defined in state law and may require enabling legislation.
TIF has been used to fund energy efficiency projects throughout the country, including small business improvements, commercial building audits and retro-commissioning, and investments at the district level including combined heat-and-power.