Using Tax Increment Financing to Fund Public Transportation: Enabling Environment and Equity Impacts

Through a review of three public transport projects developed across the United States using tax increment financing (TIF) revenues, this article examines the robustness of state- and local-level enabling statutes and the strategies used to minimize TIF’s horizontal and vertical inequities. The article finds that although TIF is widely used to fund transit-related facilities, such as rail lines and train stations, it is not used to purchase or maintain the rolling stock (e.g., train cars and buses). Furthermore, the use of TIF revenues for public transport enhances vertical equity to the extent that public transit users are likely to have lower incomes than auto users. However, in all case study projects, TIF primarily helped develop rail projects, not bus systems, with the latter more likely to be used by lower income people. Finally, setting aside TIF funds for affordable housing, job training, and relocation and rehabilitation can help reduce vertical inequities.