Resource Solution 7:

Tax increment financing for housing.

Housing Solutions

What it does

TIFs are local districts where incremental growth in tax revenues are dedicated to a use within the TIF. Typically, these revenues support infrastructure development or upgrades; however, affordable housing can also be designated as a beneficiary of TIF revenues. TIFs can reduce the cost of housing by providing gap financing or other types of subsidies.

Richmond currently contemplates that some future revenues from its proposed Navy Hill TIF would be allocated to affordable housing development (as well as funding for schools). TIFs are established by local government.

How it works

The base level of tax collections in a district is determined. The TIF then relies on increases in tax revenues in future years to support the repayment of bonds that are used to fund infrastructure or other improvements in the district. TIFs are much more commonly used to support commercial development.

Who is responsible

  • Local finance departments and financial advisors: project revenue increases and borrowing costs
  • Local housing staff: design and administer program
  • Board of supervisors or city council: approve the TIF

Key challenges

TIFs are not primarily used for affordable housing but such housing can be an ancillary beneficiary from a well-designed TIF.

Geography Tag(s)

All

New or Existing

New

Creation or Preservation

Both; more frequently used for new construction.

Requires New Funding

No

Requires new state enabling legislation

No

Other Solutions