Capital Absorption Risk · Public funding obligations
Tax Increment Financing Revenues (TIF)
Definition
For a project counting on TIF, the increment is a projection: if assessed values or taxable sales in the district grow more slowly than planned, the revenue pledged to bonds or developer reimbursements falls short. TIF bonds whose proceeds and repayment run more than 10 percent to private business use are private activity bonds, whose interest is taxable unless the bond is a qualified bond.[1]
Federal law
Formed under state law. No Act of Congress creates it; the federal laws below apply to it as described.
- Tax Reform Act of 1986, Pub. L. 99-514, § 1301, 100 Stat. 2602. Federal tax treatment of TIF-backed bonds: private activity bond tests (26 U.S.C. § 141) and the qualified redevelopment bond secured by property tax increment (26 U.S.C. § 144(c)); TIF itself is state law. Official text: govinfo.gov, U.S. Government Publishing Office.