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What is TIF?

Tax Increment Financing, or TIF, is an economic development tool passed by the Illinois General Assembly in 1977 to help municipalities encourage private investment and restore and enhance the tax base of local taxing agencies. With this tool, municipalities can finance public improvements, like roads, sewers, streetscapes, and provide incentives to encourage private investment attract new businesses or help existing businesses expand. These improvements and incentives are NOT funded with city wide taxes paid by residents. Instead, tax revenue generated by the TIF district itself is used to fund improvements and incentives.

Why a TIF?

You need more business to give life to an aging town.  Businesses need incentives to relocate or expand and TIF creates a solution for both.
 This economic development tool works for local government and private business.  TIF districts create new commercial, industrial, and residential investments.  They provide new jobs as well as a new sense of pride for towns across Illinois.

How TIF Works

TIF allows a municipality to capture, for a 23-year period, the enhanced property taxes resulting from the municipality�s redevelopment program and use those funds to pay redevelopment project costs.

During this 23-year period, all local taxing agencies continue to collect property taxes from the TIF district in the same manner as before redevelopment. This allows school districts, fire prevention districts, community colleges and other local taxing districts to continue receiving property taxes from the TIF district during the redevelopment program. Additionally, local taxing agencies may receive annual distributions of surplus TIF funds derived from the project. Finally, a municipality may close a TIF district earlier than the full 23-year period, thereby accelerating the benefit to local taxing agencies of the enhanced the tax base. 

What Are Some of the Popular Myths Concerning TIF?

 
Some property owners would be receiving some kind of tax break.

This is not true. Property owners pay the same amount of property taxes they would have paid had the TIF District not existed.

Property taxes for owners within the TIF District will increase.

This is also not true. Their property taxes are the same as everyone else in the municipality. They will only increase if the value of their property increases.

The school district is deprived of revenues from the TIF District.

Again this is not true. First, because of the way tax rates of the various taxing bodies are calculated when a TIF District is established, the school district as well as the county, the municipality and the other taxing bodies continue to receive the full amount of the taxes that they have levied during the life of the District.

Secondly, the school aid formula at the state level has been adjusted so that during the life of the TIF District, the school district actually receives more school aid from the state than it would have, had the TIF District not been in place.

Third, because certain areas may not have been developed without TIF, the school district could not take advantage of any increased equalized assessed value.