Federal Reserve Bank of San Francisco

Community Development

Tax Increment Finance: A Success-Driven Tool for Catalyzing Economic Development and Social Transformation

Author(s): Toby Rittner, Council of Development Finance Agencies

April 2013

Community Development Investment Review

In the wake of an economic downturn, many cities are left with sites, projects, districts, or entire urban cores requiring redevelopment. The need for social improvements such as community centers, school rehabs, and parks has also become a critical development challenge. However, the ongoing risks of the development market require communities to be even more diligent and aware when entering into the use of public financing mechanisms such as Pay for Success (PFS) financing. One such mechanism, tax increment finance (TIF), has the potential to forge a new path for communities to fund development projects on the basis of their success.

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