FAQs for Tax Increment Financing
Establishing and properly managing a Tax Increment Financing (TIF) district can be a complex endeavor due to several factors and requirements. Moran Economic Development has gathered frequently asked questions regarding TIF districts and funds to help make the process clearer.
What Are Some Examples of Eligible Uses of TIF Funds?
The following are some general examples of TIF-eligible costs:
- Repair, remodeling, renovating, and other similar improvements to existing structures.
- Infrastructure and utility improvements, including the construction of new water, sewer, and other utilities and upgrading existing utilities.
- Construction of sidewalks, roads, and other public infrastructure improvements.
- Property acquisition, demolition, land clearing, and general site preparation.
- Surveys, studies, engineering, consulting, planning, and other professional services related to improvement projects within the TIF Area.
- Financing costs.
Where Should a TIF District Boundary be in a Municipality?
TIF District priority areas could include:
- Areas that are ideal for future development but have not been developed to their highest and best uses due to a lack of resources or infrastructure.
- Areas generally in need of infrastructure and utility improvements.
- Specific sites where tax increment financing has been identified as a need to overcome extraordinary costs with the development of the site.
- Historic areas in a municipality that need resources for the maintenance, repair, and rehabilitation of aging structures and infrastructure.
- Other areas that include property which could benefit from activities associated with eligible redevelopment project costs.
TIF District redevelopment project areas can include one, several, or all of the aforementioned characteristics, depending on the municipality’s needs.
What Are Some Things a TIF District Does NOT Do?
- Reduce the amount of revenues to the taxing districts. The associated taxing districts continue to receive revenues for the parcels in a TIF District, based on the base value of the property when the TIF is established.
- Impose any additional tax or raise the total tax rate. A TIF District will appear as a line-item on a tax bill along with the other taxing districts, but with a rate of 0.000%.
- Change a property’s zoning or allowed use. A TIF District has no effect on the owner’s allowed use of the property, the ability to sell the property, or any other laws, regulations, or limitations which may apply to property owners.
What Are Some Things a TIF District DOES Do?
- Designates certain qualifying properties as being within a special financing area to provide resources for the redevelopment of that area as a whole.
- Creates a special allocation fund that collects incremental property tax revenues from the increases in value of the properties in the project area. The increases in value can be from improvements to the property or general appreciation, but no increases will occur as a result of the TIF District itself.
- Provides a revenue stream for a municipality to make improvements in a project area, including for structures, streets, sidewalks, infrastructure, and other eligible project costs.
Contact Us
Moran Economic Development can help you navigate the intricacies of TIF districts and funds. Our team has extensive experience providing tax increment financing consulting services to over 100 municipalities across the state of Illinois. Contact us today to schedule a TIF consultation.