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Tax Increment Financing (TIF) is authorized by the Illinois General Assembly as a means for municipalities, after the approval of a redevelopment plan and project, to redevelop blighted, conservation, or industrial park conservation areas and to finance eligible redevelopment project costs with incremental property tax revenues.
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When a redevelopment project area is established, the assessed valuation of the property within the area is documented as the base value of the district. Property taxes continue to be levied and revenues generated from the base value are distributed to local taxing bodies. Revenues generated from any increased property values above the base are set aside to be used for TIF eligible expenses as defined by State Statute. Tax increment is the difference between the amount of property tax revenue generated from the base and the increased assessed value.
No, tax rates stay the same. Only property tax revenues generated from the taxes above the base level are deposited into the TIF fund.
A municipality is required to find that, but for the designation of the TIF district and the use of Tax Increment Financing, it is unlikely that significant investment will occur in the Redevelopment Area. Without the support of public resources, the redevelopment objectives for the redevelopment project area would most likely not be realized. The area-wide improvements and development assistance resources needed to redevelop and revitalize the redevelopment area are extensive and costly, and the private market, on its own, has shown little ability to absorb these costs. Excessive vacancy throughout the area demonstrates that the private market has been unwilling to invest in these properties. Public resources to assist with site preparation and public infrastructure improvements are needed to leverage private investment and facilitate area-wide redevelopment. TIF funds can be used to support building rehabilitation, utility and infrastructure improvements, site assembly and preparation, and environmental remediation. Accordingly, but for the designation of a TIF district, these projects, which will contribute substantially to area-wide redevelopment, are unlikely to occur.
Illinois law specifies the requirements that must be satisfied for an area to qualify as a TIF district, beginning with identifying the district and the physical and economic deficiencies that need to be cured.
Prior to establishment of a TIF, an area is studied and a redevelopment plan created to demonstrate why an area needs intervention.
Municipal officials and a joint review board made up of representatives from local taxing bodies must review a plan for the redevelopment of the TIF area. A public hearing is held and a recommendation is forwarded to the Committee of the Whole and the City Council. If approved, the Mayor will sign the ordinance into law.
Some TIF eligible expenses include costs associated with acquisition of property; rehabilitation or renovation of buildings; financing costs, including interest assistance; demolition and site preparation; construction of public works or infrastructure improvements; professional services including architectural, engineering, legal, etc.; TIF administration.
The municipality monitors the progress of the TIF district in concert with the Joint Review Board which is made up of representatives from the major taxing bodies. By law the Joint Review Board meets annually to review the progress and status of each TIF. In addition, an annual report is submitted to the Illinois Comptroller; these reports are available in the State Comptroller's website.
A TIF district exists for a maximum of 23 years.
No. Schools continue to receive all the tax revenue they were entitled to before the creation of the TIF district. As a tax capped taxing body, the school district will receive the full levy amount with or without TIF.
During the life of a TIF district, the tax increment is invested in the TIF district. Once the district expires, the school district will have access to “new” money. Without the TIF district, development would not occur and the tax increment would not be produced. Not only would new tax money for schools not be generated, but the area itself would remain economically stagnant.
Geneva TIF District #1 was established in 1982 and ended in 2005. During that time, the City of Geneva increased the EAV of the TIF district from $1.5 million in 1982 to over $20 million in 2005. When adjusted for inflation, this is over a 600% increase in EAV. This was all done without raising taxes.