Tax Increment FinancingThe Tax Increment Financing program is a local financing tool that permits a municipality to use some or all of the new property taxes that result from an investment project within a designated district to assist in that project's expenses. The municipality may disburse the tax increment directly to the investing business to help pay project costs, use it to retire bonds it issues as part of the project, or retain it for allowable economic development purposes.
A municipality may choose to provide "financing" to any business that is making a significant capital investment within its borders. The source of the financing is taxes paid on new, real property. All TIFs are negotiated at the municipal level between the community and the property owner.