In 2022, the Village approved the 2022 Downtown Strategic Action Plan after an extensive study-period, which included significant input and feedback from the public. The Downtown Strategic Action Plan established the future vision, goals, and priorities for Downtown Itasca. The Plan also provided for specific strategies and action steps to make the Plan a reality. One of those strategies is to establish a TIF District in the Downtown.
As a potential tool to support reinvestment and spur redevelopment in the community, the Village is currently exploring the establishment of a Downtown North TIF District.
Tax Increment Financing, known as TIF, helps local governments attract private development and new businesses using local resources that do not depend upon an increase in taxes or reduction of other services. TIF projects also help to sustain and grow the equalized assessed value (EAV) for the proposed redevelopment project areas. The EAV growth and private investment mean more revenue to help the Village meet its other needs. As a result, the community as a whole, not just the area targeted for TIF, improves.
In the 1960’s and 1970’s, the federal and state governments, including Illinois, began cutting back economic development programs that cities could use to revitalize communities. TIF districts are one of the few remaining tools that local governments can use to attract new business, invest in infrastructure and rebuild blighted areas. TIF districts are a popular and effective redevelopment tool, used in 47 states across the country and in over 250 Illinois cities.
For more information on the history, and laws governing TIF districts, please visit the Illinois Tax Increment Association.
A TIF District's revenues ("tax increment") come from the increased assessed value of property and improvements that occur within the District. Once a TIF District is established, the "base" assessed value is determined. As vacant land and dilapidated properties develop with TIF assistance, the equalized assessed valuation (EAV) of those properties increases. New property taxes resulting from the increased assessed valuation above the base value create an incremental increase in tax revenues generated within the TIF District.
The "tax increment" created between the "base" and the new EAV is captured, deposited into a special municipal TIF account and used solely for economic development. The real estate tax increment can be used as a source of revenue to reimburse certain costs for public and private redevelopment projects either by issuing TIF Revenue Bonds or by reimbursing developers on a "pay-as-you-go" basis.
When a municipality decides that TIF might be a valuable tool for economic development, a feasibility study is prepared. The feasibility study includes an inventory of any existing housing in the study area, and determines whether the area is eligible for TIF according to State regulations.
If the study area is found to be eligible, the municipality, or a consultant hired by the municipality, prepares a plan for redevelopment of the area. This plan is presented at a public meeting, where initial feedback from the community can be assessed. In addition, members of the public and community organizations can sign up on an “interested parties” registry that the municipality will use to notify persons and organizations about the TIF process.
The Village’s Downtown North TIF Qualification Report and TIF Redevelopment Project & Plan can be found here.
Next, the municipality will set a date and time for a formal public hearing, and will then notify each of the taxing bodies that levy taxes in the proposed district. Representatives from each of these taxing bodies meet as a “Joint Review Board,” to review the redevelopment plan and make a recommendation to the municipality. A public hearing is held next, at which time comments from the public are taken.
After that, the municipality can choose to enact tax increment financing. If TIF is adopted, the district may be in place up to 23 years. Each year, the municipality is required to account for revenues and expenditures to and from the TIF fund. Throughout the life of the TIF, the municipality can make improvements and offer incentives to encourage the redevelopment of the area according to the objectives of the redevelopment plan.
Citizens can take an active role by attending public hearings and meetings to voice their opinions on the TIF proposal. Notice of the availability of the plan and the date and time of a public hearing must be sent to all property owners within the proposed TIF District, as well as other interested parties.
No, TIF is not a tax and does not generate tax revenues by increasing tax rates; it generates revenues by allowing the municipality to capture, temporarily, the new tax revenues produced by the increased value of properties in the Project Area.
These districts dedicate the increased property tax revenues generated within the TIF for improvements within the district to encourage new economic development and job creation. Funds may be used for costs associated with the development or redevelopment of property within the TIF, allowing blighted, declining and underperforming areas to again become viable.
TIF is an acronym for Tax Increment Financing and it is an economic development tool authorized by the TIF Act allowing municipalities to reallocate property tax dollars in a specific geographic area for specific purposes and for a specified period of time.
Property tax revenue generated from private development within a TIF District is new money. Without TIF, the development would not have occurred and the tax increment would not have been produced.
These incentives will potentially help lead to new developments occur in Downtown Itasca, which have not occurred for years.
Unlike home rule communities which are given broader powers with respect to tax collection and the power to regulate and financial incentives they may offer, Itasca has limited resources with which to stimulate and assist economic development in the community. The TIF technique is particularly helpful to non-home rule communities like Itasca.
In Illinois, TIF districts are used by communities with populations as small as 138 and as large as 2.8 million and every size community in between. TIF can help any size community rebuild infrastructure and attract private investment. TIFs are found throughout Illinois. A complete list of Illinois communities with TIFs is available on the Illinois Comptroller's website.
The maximum life of a TIF District is 23 years. However, it can be shorter if the municipality determines that a shorter period is more appropriate. The municipality has the ability throughout the life of the TIF District to terminate the District at any time, subject to any contractual obligations that may exist.
Local governments monitor the progress of the TIF district. By law, all the school districts and major local taxing bodies meet with the TIF municipality annually to review the progress of each TIF. Under Illinois law, municipalities have an obligation to cooperate with other taxing bodies in monitoring TIFs. By law, the Joint Review Board must meet annually to review the effectiveness and status of the TIF district.
The Joint Review Board is consisted of representatives of the various taxing bodies that assess taxes in the proposed TIF District. The Joint Review Board consists of the following agencies:
On December 6, 2022, the Village entered into an agreement with Kane, McKenna, and Associates, Inc. to assist the Village with establishing a TIF District in the Downtown area.
Interested parties and organizations may register with the Village to receive information on the proposed designation of a Redevelopment Project Area and the approval of Redevelopment Plan and other related matters as provided by the law to receive information about the TIF activities and redevelopment project areas for which they register. For more information, please click here.