Land Use & Zoning

A Minnesota city's downtown area is being revitalized with new mixed-use development. The city offers 'tax increment financing' (TIF) to help fund infrastructure improvements. TIF works by:

AReducing the property taxes of new developments to attract investment
BCapturing increased tax revenue from new development to pay for public improvements✓ Correct
CProviding state grants to cities for economic development
DIssuing bonds backed by future lottery revenues

Explanation

Tax Increment Financing (TIF) captures the increased tax revenue (the 'increment') generated by new development in a designated area. The increment is used to pay for public infrastructure improvements that support the development. Minnesota has a well-developed TIF program that has been used extensively for economic development and blighted area redevelopment. TIF requires specific city council action and compliance with state statutes.

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