Tax increment financing (TIF)
Definition
Tax increment financing freezes a redevelopment area's taxable property value at a base year.1 For a set period, any tax revenue from value growth above that base gets diverted into a special fund for the project instead of going to schools, the county, and other taxing bodies.
Why it matters
TIF lets a city borrow against future growth without a public bond vote, but it also quietly redirects money that would otherwise fund schools and county services, often for 20 or more years, without the school board or county getting a vote on whether the TIF district gets created.
Seen in the wild
Township High School District 214 sued the Village of Mount Prospect, Illinois, after the village created a new downtown TIF district overlapping one that had just expired, arguing the move would keep the district's share of rising property tax revenue locked up for potentially decades longer. The village later offered to share revenue with the district starting in year 12.