What is TIF?
TIF stands for Tax Increment Financing, and it’s a way cities help improve areas that need development, like old buildings or empty lots, without raising taxes for everyone. Here’s how it works:
- The "before" picture: Imagine a neighborhood with old, run-down buildings or empty spaces. These areas don’t bring in much property tax money because they’re not worth much. (In Wauwatosa, look at the north and south side of Burleigh Street. The north side has received TIF, and has housing, retail like the Mayfair Collection, and updated infrastructure. The south side does not have TIF and has vacant areas.)
- The plan: The city decides to fix it up—maybe by building new stores, apartments, or parks. But that costs money, so the developer partners with the city to use TIF to invest in it.
- Freezing taxes: The city "freezes" the amount of property tax money it collects from that area at its current level. So, for a while, schools and other services still get the same money they’ve been getting, even if the area improves.
- The "after" picture: As the area gets better, property values go up. This means the property taxes on those buildings increase too. The city takes the extra money from these higher taxes (the "increment") and uses it to pay back the costs of improving the area.
