What is TIF?
Tax Increment Financing

Tax Increment Financing is a unique tool that captures a portion of property and sales tax from a designated area that allows money to be reinvested to that area and not somewhere else in the City. This ensures that the dollars spent in this area will be used to improve development and infrastructure. TIF is not a new tax on the current property owners. Urban Renewal Plans have a lifespan of 25 years from the approval of the plan to use TIF as a financial mechanism for redevelopment.

TIF, short for Tax Increment Financing, has become an important tool in redevelopment. In Colorado, only Urban Renewal Authorities (URAs) and Downtown Development Authorities (DDAs) are able to use TIF. This has become the primary method of assistance with the funding within designated redevelopment areas.

Current Property Taxes

Property Gets Redeveloped

Property taxes are re-assessed at a higher value

Difference = TIF and will be used for public improvements

TIF is used to fill the gap between the total cost of the redevelopment project and the level of private financing it can support. Under this financing tool, the level of property tax and/or sales tax collected before redevelopment is used as a base and the new tax revenues expected are estimated. The difference between the base and the increased taxes collected as a result of the redevelopment project is the tax increment and it can then be used to either pay off bonds issued to help pay for the project or to reimburse developers for a portion of their costs. The base is adjusted every two years in connection with the propety tax reassessment process.

TIF is only used when an area or property cannot attract sufficient private capital for redevelopment and when the redevelopment meets a public objective. As TIF revenues are generally used for infrastructure improvements associated with the redevelopment that benefit the public, including site acquisition and clearance; construction and/or reconstruction of streets, utilities, parks or other public infrastructure; and the removal of hazardous conditions.

These funds in fact do not belong to the City but are the property of the Authority.