Tax Increment Financing is a tool used by municipalities to help finance the redevelopment of areas within a community through increased property taxes from the enhanced value of property (both developed and undeveloped) resulting from the implementation of infrastructure and service improvements. TIFs use future increases in property tax revenues to finance current infrastructure investments (such as highway, transit, and other transportation facilities). A TIF directly relates infrastructure investments to increases in the value of existing property within the district. A TIF can also encourage new development to further expand the tax base. Project debt service is repaid through increased property tax revenues, provided the development materializes. The primary benefits of TIFs for transportation infrastructure funding include providing access to capital financing markets through a dedicated revenue stream for debt repayment and growing public tax revenues without increasing tax rates.
Appendix A provides illustrations of a representative sample of the various types of transportation PPP projects undertaken in the U.S. and around the world, including highways, bridges, tunnels, and transit rail lines. These projects are mostly large in scale and required significant contract administration skills by the public sponsoring agency and technological capabilities by experienced project delivery teams.