Tax Increment Financing (TIF) involves the issuance and sale of tax-exempt governmental revenue bonds to finance public infrastructure redevelopment within one or more predetermined geographic areas on the basis of specific statutory eligibility criteria. To secure the repayment of TIF bonds, the government consents to segregate into a special account a portion (e.g., 25 percent, 50 percent) of the incremental growth in real property tax collections occurring within the area from a specific date. Sales tax increments may be applied to shorten the repayment period, or to provide credit enhancement.

Tax increment projects must be consistent with statutory criteria (a Redevelopment Plan) and typically are supported by project feasibility studies, cost/benefit analyses, and development agreements with sponsors of private projects within the benefited areas. Issuance powers and limited tax collection authority may be delegated to TIF Districts, but generally is retained by the government or its instrumentality.

The District, however, is in a unique position to complement these infrastructure development tools by issuing up to $15 million of tax-exempt "Enterprise Zone (EZ) Facility Bonds" to assist in financing each qualified privately-owned facility. At the same time, each such business annually may claim federal employment tax credits, special expensing allowances and other benefits during the five-year life of the EZ designation.

For further information on Tax Increment Financing, please call the Office of Planning and Economic Development, (202) 727-6365.