Tax Increment Financing (TIF)

Tax Increment Financing (TIF) is a public financing method used by local governments to stimulate economic development in designated areas, often those considered blighted or underutilized. TIF works by capturing the future increase in property tax revenues—known as the "tax increment"—that results from rising property values due to new development or infrastructure improvements. These incremental revenues are then reinvested back into the area to help fund redevelopment projects that might not be financially feasible otherwise. TIF is authorized and/or used in all 50 states and the District of Columbia.

How TIF Works

When a redevelopment area is established, the existing assessed property value is set as the base value. All local taxing agencies (such as Washoe County School District, the City of Reno, and the State of Nevada) continue to receive their share of taxes based on this base value for the duration of the redevelopment area.

As property values increase due to new development, the additional property tax revenue is captured by the Redevelopment Agency (RDA). This increment is then reinvested into the same area to fund improvements and incentivize further development.

Reno uses a pay-as-you-go model, meaning the City does not issue bonds or take on debt. If no development occurs or property values do not increase, no increment is generated—and no public funds are spent, making it a relatively low-risk approach.

Purpose of TIF in Reno

TIF is used to stimulate economic development by attracting private investment and revitalizing blighted or underdeveloped areas within designated Redevelopment Areas.

The primary goals of TIF in Reno include:

• Attracting private investment through targeted financial incentives.
• Funding public infrastructure and capital improvements without raising taxes or drawing from the City’s general fund.
• Supporting job creation and economic activity in redevelopment areas.
• Reducing blight and enhancing the long-term viability of underutilized areas.

Reno's Redevelopment Areas

Reno has two Redevelopment Areas: Redevelopment Area 1 (RDA #1) and Redevelopment Area 2 (RDA #2).

• Redevelopment Area 1 was established in 1983 and extended in 2017, RDA1 covers the downtown core and is set to expire in 2043. It is expected to begin generating tax increment above debt service in FY25.
• Redevelopment Area 2 was established in 2005 and expanded in 2006 to include areas like The Reno Hilton (now Grand Sierra Resort), Boomtown, and other areas. RDA2 will sunset in 2035. It began generating positive increment over debt service in FY24.

Understanding TIF Deal Terms

Agreement Window & Expiration

No new TIF deals can be signed after a Redevelopment Area (RDA) reaches its sunset date. Example – A project approved in 2027 inside RDA 2 and finished in 2030 only receives reimbursements until 2035, when RDA 2 expires. 

Gap Analysis Requirement

Before allocating TIF funds, the City performs a gap analysis to determine the minimum amount needed to make a project financially viable. This ensures responsible use of public incentives and avoids over-subsidization.

Risk Management

The City and RDA have no liability if a project fails or declares bankruptcy during construction. Reimbursements only occur after a Certificate of Occupancy is issued, the property is assessed, and increased taxes are paid.

Transfer or Modification of TIF Agreements

• If a project is sold but remains consistent with the original TIF agreement, the incentive may transfer to the new owner.
• If the project changes materially, the agreement is void and must be renegotiated.
• Any extension of an RDA would require renegotiation of existing agreements if either party wishes to adjust terms.