What is Tax Increment Financing (TIF)?
Tax Increment Financing (TIF) is a tool used to finance development or redevelopment within a city that would otherwise not occur. TIF uses the increased property taxes generated by new real estate development within a TIF district to pay for certain eligible costs associated with the development or redevelopment. TIF is authorized under Minnesota law.
What is a TIF District?
A TIF district is a defined area in which increased local taxes are captured to finance qualified developments. There are five different categories of TIF districts, including redevelopment, housing, renewal and renovation, economic development, and soils condition. Notably, a redevelopment TIF district is qualified based on its condition prior to redevelopment, and a housing TIF district is qualified based on the post-redevelopment conditions and requires low-income housing.
TIF districts are created by a development authority, such as the Housing and Redevelopment Authority (HRA), and are subject to the approval of the municipality if the authority is not the municipality.