Final answer:
The purpose of a Tax Incremental District (TIF) is to promote economic development by using the increased property tax revenue from new developments to finance improvements in underdeveloped or improving districts.
Step-by-step explanation:
The purpose of a Tax Incremental District (TIF) is to promote economic development. A TIF is designed to foster growth and improvement in districts that are underdeveloped or in need of revitalization. By freezing property taxes at the pre-development level, the increased property tax revenue that results from new development (the increment) is used to finance the borrowing that funded the improvements. This form of public financing is a common economic development tool to attract private investment in areas that would otherwise remain undeveloped or underdeveloped.
Zoning regulations often work in tandem with TIFs to ensure that development aligns with municipality plans. They divide the municipality into different zones (residential, commercial, industrial) with specific ordinances that dictate how property in each zone can be used.
Using TIFs, local governments can create more attractive areas for businesses, which can lead to job creation and a broader tax base in the long run. This contrasts with policies solely focused on tax revenue, which can sometimes hinder economic growth if it results in excessive taxation of consumer behavior or investment. So, while TIFs may reduce short-term tax gains, they can contribute to substantial long-term economic benefits.
Answer: c) To promote economic development