Tax Increment Financing
Tax Increment Financing (TIF) is a mechanism used by municipalities in Illinois and across the United States to meet economic development challenges as it relates to encouraging economic growth in blighted, decaying, and underperforming areas in need of assistance with development and redevelopment. In addition, communities often have a tremendous need for infrastructure improvements, such as roads or utilities, while also needing to attract new businesses or retain existing businesses and facilitate expansion. Encouraging the development of these areas often requires a public investment to reduce costs and attract development. However, utilizing TIF as an economic tool can accomplish this growth without drawing from municipal revenues or raising taxes.
What is the “Tax Increment” in Tax Increment Financing?
The “tax increment” is the difference between the amount of property tax revenue generated before TIF District designation and the amount of property tax revenue generated after designation. A base value for each property in a TIF District is determined at the point when a municipality establishes, by ordinance, a Tax Increment Financing Redevelopment Plan and Project Area. Any taxes paid on the base value continue to go to the associated taxing districts, and any taxes paid on the incremental value go into a special fund (the municipality’s “TIF Fund”). That TIF fund can help municipalities fund projects and accomplish their economic goals.
How is a Tax Increment Financing District Established?
To establish a TIF District, the proposed area must qualify. Eligibility is based on certain factors, which are different for developed and undeveloped properties. Once an area is found to be eligible, a redevelopment plan is prepared for the area.
After completing the eligibility study and TIF plan, a municipality must hold a Joint Review Board of the taxing districts, provide notice to residents and property owners, hold a public hearing, and meet other statutory requirements in the establishment process. Then, they can adopt the TIF plan, establish the TIF boundary, and implement tax increment financing for the area via ordinance.
A TIF District can exist for up to 23 years. An extension of the TIF District’s life can be done for an additional 12 years but requires an act of the state legislature.
How Can an Area Qualify for Inclusion in a TIF District Area?
Developed Property
The factors evaluated for a developed property include, but are not limited to, the following:
- Dilapidation
- Obsolescence
- Deterioration
- Presence of Structures Below Code
- Illegal Use of Structures
- Excessive Vacancies
- Inadequate Utilities
- Environmental Clean-Up
- Lack of Community Planning
- Stagnant or Declining EAV Growth
Undeveloped Property
The factors for an undeveloped property evaluated include, but are not limited to, the following:
- Obsolete Platting
- Diversity of Ownership
- Deterioration of Adjacent Areas
- Stagnant or Declining EAV Growth
What is the Timeline to Establish a TIF District?
Generally, it takes four to six months to complete the statutory requirements to establish a TIF District. The schedule is largely determined by the municipality’s regularly scheduled meeting dates and frequency of those meetings, as well as complying with the required timelines per the TIF Act. The following is a general overview of the process:
- Adopt initial resolutions/ordinances, create feasibility/eligibility study, and notify taxing districts.
- Adopt an ordinance establishing a public hearing date and create a redevelopment plan.
- Hold a joint review board meeting.
- Provide notice of public hearing to residents and property owners, as well as publish the notice in the newspaper twice.
- Hold the public hearing.
- Adopt ordinances establishing the TIF District.
Moran Economic Development will assist with every step of the process, from the preparation of the study and plan to providing draft documents of every procedural item for consideration at board/council meetings. We also will conduct the scheduled milestone meetings of the TIF process and will make ourselves available for any ad hoc meetings as necessary.
FAQs for Tax Increment Financing Districts
Our team understands that the establishment of a TIF district can involve various complexities. We have compiled a list of frequently asked questions about TIF funds and districts to provide more information on the overall process.
Administration of Tax Increment Financing Areas with Moran Economic Development
After the establishment of a tax increment financing district, we can provide assistance with the administration and utilization of the program. The following are some examples of the services we provide to help maximize the potential of the redevelopment project area:
Annual Reporting
We will assist the community in submitting its annual TIF report to the State of Illinois.
Financial Feasibility Analysis
We will create revenue generation projections to help municipalities evaluate the type and amount of assistance for redevelopment projects.
Continuing Education
We believe that in order for communities to redevelop their project areas successfully, it is important to understand how to utilize TIF dollars best. Moran Economic Development provides ongoing technical support and education to communities that need help in the daily administration of tax increment financing.
Joint Review Board Meetings
We can help your community organize the annual Joint Review Board meeting with your taxing districts, including scheduling, notification, and conducting the meeting. Our services include preparing a presentation covering TIF Redevelopment Project Area(s), annual TIF Audit Report review, revenue and expenditure analysis, proposed future goals, and other relevant information about your community’s Tax Increment Financing programs.
Redevelopment Agreements
We can help with development projects and assist the community in creating and understanding agreements in the framework of the Illinois TIF Act.
Negotiations with Developers
We will conduct negotiations with interested developers over tax increment financing assistance, as well as review any existing redevelopment proposals.
Business Recruitment
Because we work with developers and businesses, we will market a community or an area to prospective or existing businesses that are considering location or expansion in this community. We will also assist and prepare site search proposals for national and statewide site consultants interested in the community.
Creation of Marketing Packets
We will gather all existing community data and maps and then curate new, pertinent information to create a concise yet powerful marketing toolkit. This resource equips the community to effectively attract development interest in TIF properties.
Tax Increment Financing Featured Projects
We have provided tax increment financing consulting services to over 100 communities throughout Illinois, which includes the following projects:
Contact Us
We are here to support your community’s developmental goals. Contact us with any inquiries or if you wish to explore our Tax Increment Financing services further.