Tax Increment Financing Districts
What is TIF and how does it work?
The Village identifies an area for redevelopment (Redevelopment Project Area/TIF District) with the intent to reinvest and leverage future tax revenues. To establish a TIF District, Illinois law specifies a number of requirements that must be satisfied for an area to qualify for TIF, including blight and economic deficiencies.
When the TIF district is established, the value of all the properties within the area at the time of establishment is considered the “base value”. The property taxes paid on the base value continue to go to the various tax bodies each year in the same manner as they would have if the TIF did not exist. As the property is developed in future years, the value of the property will increase; the difference between the base value and the current value is considered “tax increment”. Tax increment is collected by the County and distributed to the Village to make investments in the TIF District. At the expiration of the TIF, all of the revenue growth is then distributed to the various taxing bodies.
How is Tax Increment used?
The Village receives increment on an annual basis and so projects are reimbursed on a pay-as-you-go basis, meaning an annual amount of available increment may be reimbursed to the developer for eligible project costs. Prior to projects being constructed, the Village will enter into a Redevelopment Agreement (RDA) with the developer to outline the development of the project and the amount of increment that will be reimbursed to the developer for incurring eligible Redevelopment Project Costs.
Illinois law outlines the eligible Redevelopment Project Costs uses of TIF Funds. Generally, TIF funds may be used for the following:
- Property acquisition
- Studies, surveys, and plans
- Demolition and site preparation
- Renovation or rehabilitation of existing buildings
- Construction of public works or improvements
- Job training
- Professional services such as architectural, engineering, legal, and financial planning.
- Marketing sites within the TIF
- Financing costs
For the entire list of eligible use, please reference the TIF Act 65 ILCS 5/11-74-4-3 section (q) or the IJRL TIF act 65 ILCS 5/11-74.6-10 section (o).
How long does a TIF last?
A TIF district generally lasts for 23 years to provide adequate time for development and reimbursement of eligible costs, however, the TIF may be extended longer as allowed by state statute.
TIF Districts in Machesney Park
The Village currently has five active TIF Districts. Click here for an interactive map of the districts.