In Massachusetts, municipalities have limited tools to entice businesses to locate and expand in a weak marketplace. The most frequently used alternative is the Economic Development Incentive Program (EDIP) and its tax increment financing (TIF) initiative. TIFs – first authorized in 1993 – provide local property tax relief and state investment tax credits for select real estate development projects that also result in the creation of permanent jobs. While property taxes are paid on the base (or pre-improvement) property value, developers are given relief on new or incremental value generated by the investment.
TIFs are important, yet they remain controversial. Strategically applied, however, TIFs offer unique benefits without the direct outlay of local funds. They are a low-impact way to improve Worcester’s economic competitiveness and guide private investment toward the accomplishment of public goals.