What is TIF Tax Increment Financing (TIF)?

TIF is a tool to use future gains in taxes to finance current improvements (which theoretically will create the conditions for those future gains). When public projects such as a road, school, or infrastructure improvement are carried out, there is often an increase in the value of surrounding real estate, and perhaps new investment (new or rehabilitated buildings, for example). This increased site value and investment sometimes generates increased tax revenues. The increased tax revenues are the “tax increment.” Tax Increment Financing dedicates tax increments within a certain defined district to finance debt issued to pay for the project. TIF is designed to channel funding toward improvements in distressed or underdeveloped areas where development might not otherwise occur. TIF creates funding for “public” projects that may otherwise be unaffordable to localities, by borrowing against future property tax revenues.
Source: Wikipedia