What is the DIF?

“DIF” stands for “District Improvement Financing”. A program similar to the DIF exists in nearly every state. These programs essentially allow communities to capture a portion of new tax revenue in a certain area and use that money to pay for capital improvements. No new taxes are levied, and there is no reduction or redirection of existing tax revenue.

As a hypothetical example of the DIF, consider an undeveloped area in the Town of ABC which is zoned for a commercial office park. There are no roads or other infrastructure in this area, so businesses which might be interested in locating in the Town are less likely to do so. They are more likely to locate in communities that already have the necessary infrastructure in place.

Under the DIF, the Town of ABC can build roads and other infrastructure into the office park, issuing bonds to finance the construction. New tax revenue is created as companies move into the new office park, and all or a portion of the new tax revenue can be dedicated to repaying the bonds that financed the infrastructure investment. Employment in the Town would increase, as would commercial property tax revenue.

The DIF can be used in a number of ways. The Town’s proposal is less speculative than the hypothetical example above, and is explained more completely in attached documents.