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Tax Increment Financing, commonly known as TIF, is a public financing method used by local governments in Virginia to stimulate economic development and reinvestment in designated areas. Through TIF, municipalities can fund public improvement projects by capturing the increase in property tax revenues-referred to as the "increment"-that result from increased property values due to redevelopment. In Virginia, TIF laws enable cities, counties, and certain authorities to create special districts where these improvements can be made and financed. While TIF can be a powerful tool for revitalization, it requires careful legal navigation to ensure compliance with state statutes and local ordinances.
Tax Increment Financing projects are often complex, involving multiple stakeholders, intricate legal frameworks, and substantial public funds. Common situations where legal assistance is helpful include:
Given the potential for legal challenges and the need for transparency, seeking qualified legal counsel is essential for both private developers and public officials involved in TIF projects.
In Virginia, Tax Increment Financing is governed primarily by the Code of Virginia Section 58.1-3245.1 et seq., which provides the authority for local governments to create TIF districts. Key aspects of Virginia’s TIF laws include:
Local governments may also implement additional rules or guidelines tailored to the needs of specific projects or districts.
Tax Increment Financing is a funding mechanism that allows local governments to finance improvements in a specified area by using the future increases in property tax revenues generated by rising property values.
Virginia law allows cities, counties, and towns to create TIF districts, subject to ordinance and public hearing requirements.
TIF funds can support infrastructure projects, public facilities, utility improvements, streetscapes, and other redevelopment initiatives that contribute to economic growth.
Property owners continue to pay taxes as usual, but the increase in tax revenue from rising property values within the district is allocated to the TIF fund.
TIF districts do not create new taxes or raise existing rates; they earmark any increase in property taxes generated by new development or rising property values for reinvestment in the area.
If the anticipated growth or redevelopment does not occur, incremental revenues may fall short of projections, potentially impacting repayment of TIF bonds or limiting available funds for improvement projects.
A locality must hold a public hearing and adopt an ordinance specifying the district boundaries, the improvements to be made, and the mechanisms for collecting, managing, and using TIF revenues.
TIF funds are primarily intended for public improvements, but some private developments that support public goals, such as affordable housing, may qualify for TIF assistance if allowed by local ordinance.
The duration of a TIF district varies by project and locality, but TIF districts typically last until the bonds are repaid or the project is complete, often ranging from 20 to 30 years.
Check with your local government’s economic development or planning office for maps and documentation related to TIF district boundaries and projects.
For those seeking more information about Tax Increment Financing in Virginia, the following resources may be helpful:
If you are considering a project involving Tax Increment Financing or have concerns about a TIF district in Virginia, consider taking the following steps:
An experienced attorney can help you navigate the requirements, ensure compliance, and advocate for your interests in any Tax Increment Financing matter in Virginia.
