Tax Increment Financing
Tax Increment Financing – or TIF – projects give cities and counties tools to retain, recruit, and grow business and industry. Tax Increment Financing is a method utilized by local governments to pay for community improvements with future tax revenues. For example, a blighted neighborhood might have dilapidated buildings worth only $50,000 in property value. Using a TIF, the local government could build new infrastructure or even replace the run-down buildings with new ones as well as other improvements to increase total property values in the area to $750,000. The $700,000 difference in property value increases property tax collections. The increased property tax revenue is used to recover the cost of the TIF improvements. In short, it’s a way to allow new development to pay for itself.
State law requires the Comptroller and the Commissioner of Economic and Community Development to review certain TIF plans to determine whether the financings are in the best interest of the State of Tennessee. The Uniformity in Tax Increment Financing Act of 2012 can be found in Tennessee Code Annotated § 9-23-101 et seq.