Pilot vs. TIFs: Choosing the Right Tool for Community Impact

Communities often rely on public financing tools to support redevelopment projects that deliver long-term public benefit. Two of the most common tools used in Tennessee are Payments-In-Lieu-Of-Taxes (PILOTs) and Tax Increment Financing (TIFs). While both are designed to support development, they function differently and are suited to different project needs.

A PILOT reduces or phases in property tax payments for a specific project over a defined period. They are typically used to help close financing gaps for projects that provide measurable public benefits, such as job creation, neighborhood revitalization, or community-serving facilities. PILOTs are project-specific and negotiated through authorized entities, often Industrial Development Boards.

A TIF, by contrast, captures future increases in property tax revenue within a defined area and uses that incremental revenue to fund public improvements. TIFs are commonly applied to infrastructure, site preparation, and streetscape investments that support broader redevelopment within a district, rather than just a single project.

Choosing between a PILOT and a TIF depends on the scale of the project, the type of public benefit, and the desired long-term outcome. PILOTs are often appropriate for individual projects that require near-term financial support, while TIFs are better suited for area-wide improvements that unlock long-term redevelopment potential.

River & Main works with communities during the planning and feasibility stage to evaluate which tool — or combination of tools — best aligns with community goals, statutory authority, and long-term impact.