Tax Increment Financing
Tax Increment Financing, abbreviated as TIF, is a method used by local governments to finance the redeveloping of blighted areas. Tax Increment Financing allows for redevelopment to be funded by the future gains of the area being restored. The redevelopment helps to increase the real-estate value of an area and generate new interest in turn creating taxable property.  This method of financing is controversial as it applies public, taxpayer money to often times privately funded projects.
History of TIF in Kentucky
House Bill 549 was introduced by the Kentucky General Assembly in 2007. The city and/or county government is responsible for establishing the areas for development which qualify for TIF. According to House Bill 549, the TIF area may not exceed three square miles and the value of its property may not exceed 20 percent of the total value of taxable property in the jurisdiction establishing the TIF area. 
TIF in Lexington
Currently, the largest and most controversial example of TIF is the CentrePointe Development in Downtown Lexington, Kentucky. The CentrePointe TIF district was approved by the city council. The money will be used for the improvement of downtown infrastructure including sidewalks, parking, and a public music venue to be housed within the CentrePointe development.
The Bourbon Distillery district Development is seeking $81 million  in TIF funding to renovate various historic bourbon distilleries and aid in the development of the area surrounding Manchester Street.
Lexington Downtown Development Authority
TIF in Louisville
There are a couple examples where TIF is planned on being used in Louisville, Kentucky.
4th Street Live
4th Street Live is a popular center for dining and entertainment in Downtown Louisville.
Museum Plaza is a major downtown development in downtown Louisville, Kentucky comparable to the CentrePointe development in Lexington. House Bill 549 allowed for nearly one fourth of the cost of the facility to be financed by the state. This amounts to approximately $130 million. Construction began in fall of 2007 and continues into 2008.
TIF In Bowling Green
This is a development area and tax increment financing district for the redevelopment of an approximately 40-acre site in downtown Bowling Green, Kentucky in cooperation with Warren County, Kentucky and Western Kentucky University with Alliance Corporation acting as the master developer. It involves a comprehensive mixed use economic redevelopment area comprised of residential, office, hotel, restaurants and other commercial components, with certain public elements that include a Baseball Stadium, Parking Garage, a Southern Kentucky Performing Arts Center and other public infrastructure improvements.
The city commissioners voted on June 12, 2007 unanimously to approved the "Signature TIF" district plan. By signing up for a "Signature TIF" the city signed up for the highest level TIF which would equal collecting at least $200 million from taxpayers over 30 years. At this time the city also signed an agreement with the Glasgow-based Alliance Corp to serve as the master development for the projects.
Criticism of Tax Increment Fianancing
Tax Increment Financing is controversial because it applies taxpayer money to often times privately funded projects. While TIF was originally intended to restore blighted areas of a community some argue that it merely shifts the burden of risk from the private business owner to the government. In essence the argument is that the government is trading upfront, no interest financing for projects in hopes of receiving significant tax revenue from the development in the future. Reason Magazine provided a summary of this argument in the article "Giving Away the Store to Get a Store: Tax increment financing is no bargain for taxpayers."
- Wikipedia: Tax Increment Financing
- Kentucky Finance Cabinet
- Distillery District needs $81 millionaccessed September 11, 2008
- Louisville Arena Authority FAQaccessed September 11, 2008
- Bowling Green Daily News, New Taxes, old projects, June 16, 2007