Tax Increment Financing: Learning from the Georgia Experience

Originally published 1st Quarter 2004

The gradual decline of federal involvement in economic redevelopment has led local governments to search for methods of funding commercial and residential projects with sources other than block grants or general revenue sharing. One such method that has become increasingly popular is tax increment financing (TIF). This mechanism is now one of a few tools that local governments can use to stimulate economic development in their communities.

TIF financing allows a local government to capture tax revenues attributable to increases in property values within a prescribed development area (the TIF District) and use those revenues for neighborhood renewal projects for a defined period of time. These new revenues - also called "increment" - arise from new development within the TIF District or from general increases in the value of existing properties, resulting in higher tax revenues.