Tax Increment Financing (TIF) is a tool to finance public improvements within a defined area. The improvements should enhance the environment and attract new investment. The statutes governing tax increment financing are in Chapter 311 of the Texas Tax Code.
A municipality makes an area eligible for tax increment financing by designating a reinvestment zone, also called a tax increment reinvestment zone (TIRZ) or a tax increment financing (TIF) zone.
Costs of selected public improvements outlined in the zone’s project and financing plan may be paid by current or future tax revenue flowing from redeveloped or appreciated real property valued in the zone. The additional tax dollars generated by the growth of real property value in the zone are called the tax increment. These dollars flow to a fund for a specified number of years. Money flowing into the fund each year is spent according to an approved plan and in accordance with agreements in place with participating governmental units.
The Texas Comptroller provides this information to better understand how a TIRZ works.
Additional Information regarding Reinvestment Zone No. One (Falcon Pointe TIRZ)
Documents available for the TIRZ.