What is the difference between "TID" and "TIF"?

TID = Tax Increment District

The actual physical area designated for potential development projects.

TIF = Tax Increment Financing

The economic development program that helps promote local tax base expansion by using property tax revenue to fund site improvements within a specified area (see TID)

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1. What is the difference between "TID" and "TIF"?
2. How does TIF work?
3. Why would a community use TIF?