Tax Incremental Financing (TIF)

TIF is a financing tool available to cities, villages and towns to encourage economic development that would not occur without public assistance.  It's a partnership between the taxing jurisdictions that allows municipalities to invest in infrastructure and other improvements.  These investments are paid for by collecting property tax revenue from the newly developed property.  As property values rise, the property tax paid on that private development is used by the municipality to pay for the projects.  The tax paid to the schools, county and technical college districts (the overlying taxing jurisdictions) is also used by the municipality to pay for the improvements.  After the costs of the projects are paid off, the TID is closed and the value of all the new development gets shared by the municipality, schools, county and technical college as it does for other property.