As many of our readers know, the new Crystal City Sector Plan was considered last night (see here for our prior analysis of the proposed plan), but did you know it contained a proposal for a Tax Increment Financing (“TIF”) fund to include the Crystal City, Potomac Yard and Pentagon City areas at the same time?

So what is a TIF fund? It is actually a very common and pretty straightforward tool used by localities nation-wide to finance area-specific public improvements, however, this tool often makes many people nervous because it essentially is based upon using future, anticipated tax revenue increases to finance current improvements. Said another way, the County has projected a certain “incremental” increase in property values, and will use this projected incremental increase to finance debt issued to pay for specified projects. The County has projected these incremental tax revenue increases based upon planned new densities and several projected build-out timeline possibilities.

The Crystal City Sector Plan anticipates about $207,000,000 in costs for public infrastructure improvements in streets, mass transit and public spaces over the next 20 years (such as the proposed new streetcar system, etc.). According to County staff, the recently adopted FY 2011 – 2016 Capital Improvement Program already relies on the TIF as a funding source for these three geographic areas. TIF fund programs have been critical components to many regional revitalization efforts, including Arlington’s Columbia Pike Revitalization Initiative. The County believes, over the next six years, this tool will provide approximately $27,000,000 of funding for dedicated TIF capital improvements.

Here’s a link to the County Manager’s report on the Crystal City, Potomac Yard, and Pentagon City TIF fund proposal.