TIF Financing:

It Can Work Well When Wisely Managed. In Richmond, TIFs Enrich Developers With Public Money.

Municipalities around the country use Tax Increment Financing, or TIFs, to stimulate development by applying future real estate income to infrastructure (or some other improvement) for any given project. Originally, TIFs were used to foster development in blighted areas. Over time, TIFs became common to help fund projects on desirable property as well. When well-conceived and well-managed, TIFs can bring long-term benefits to communities – even though the income to municipal coffers is reduced by the loss of taxes for a considerable time (often twenty to thirty years). 

In Virginia, many municipalities have used TIFs effectively, and typically, these successful TIFs forgive up to 50% of the future real estate tax income, so the city is still earning half its tax income on the property while benefitting from broad-based growth that enriches ancillary income streams (such as increased sales taxes and higher property values, for example).