General TIF information

What’s TIF?

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.

Tax Increment Financing has become an effective tool for local economic development. Its basic purpose is to assist stimulating investment in areas which have difficulty attracting development or redevelopment interest, or jumpstarting economically sluggish parts of the community. With this tool municipalities can make improvements to areas in need and provide incentives to attract business or help existing businesses expand without tapping into general funds or raising taxes.

It is important to understand that TIF is not a new tax. While boundaries are established for the TIF District, it is not a new taxing body being added to the property tax bill. A TIF District does not have the authority to levy its own property tax request.

Tax Increment Financing can be one of the most effective local economic development tools available to Illinois communities. Tax Increment Financing enables municipalities to self-finance redevelopment programs. TIF funds can pay for public improvements and provide economic development incentives using the property tax revenues generated by improvements within the TIF. In other words, the redevelopment itself supports related financing for the projects and programs, not the general taxpayers of the community.

Interested Parties Registry

As part of the TIF process, the Village Board adopted an Ordinance authorizing the establishment of a tax increment financing Interested Parties Registry and adopting the rules for the Registry. This Ordinance provides the opportunity for those interested individuals who are not located in the TIF district boundaries to register with the Village to receive information and documents related to the TIF district. Interested persons may complete the TIF Interested Parties Registry Form. The form must be returned to the Village Clerk, 10 S. Municipal Drive, Sugar Grove, IL 60554.

Why use TIF?

Illinois communities are constantly working to maintain an environment conducive to maintaining, stabilizing and hopefully encouraging growth of the local economy and workforce in both retaining existing businesses and attracting new businesses. Municipalities need to maintain or enhance their competitive positions in the market place by rebuilding aging infrastructure and upgrading older commercial centers, industrial properties and residential neighborhoods. With limited assistance available from federal and Illinois governments and other grants, Tax Increment Financing is a significant economic development tool. And it is locally controlled.

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, Sugar Grove 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 Sugar Grove.

The underlying purpose of using the TIF technique is to accomplish the goals and objectives of the Sugar Grove Comprehensive Plan, namely to broaden the tax base, attract and retain local shopping and employment opportunities, and improve the transportation network system.

In 1977, the Illinois General Assembly adopted the Tax Increment Allocation Redevelopment Act (the “TIF Act”) which provided municipalities the powers and authority to address local blight conditions and conservation areas within the community by undertaking redevelopment projects that aid in improving the economic wellbeing of the community. Tax Increment Financing (TIF) can help a community achieve improvements and economic development that would not likely occur on its own or without financial assistance.

How do TIF’s work?

When a municipality establishes a TIF district, the existing property values for properties within the district are recorded; this is the original taxable value (OTV). These properties already generate a certain amount of property tax revenue for the municipality and other taxing bodies. Property tax revenue generated by the OTV will continue to go to the taxing districts throughout the life of the TIF district. However, as the property values in the TIF district increase due to TIF-financed improvements, so does property tax generated by the TIF district. The increase over and above the OTV is the increment. The increment is distributed to the municipality to support economic development activities within the TIF District as authorized in the TIF Act. The use of the TIF funds are restricted and separate accounting of the TIF funds for each TIF district must be maintained.

TifRevGraph

Property owners within a TIF district do not pay an additional tax and are not taxed at a higher rate.

How are TIF funds used?

TIF funds can be used to support a number of public improvements and other investments that support the Redevelopment Plan and Project including, but not limited to:

  • Public infrastructure improvements including roads, sidewalks, utilities, water, sanitary sewer, storm sewer, detention/retention, parking, street lighting, etc.
  • Acquisition of property, land assembly, demolition, site preparation, etc.
  • Rehabilitation of older buildings
  • Correction and mitigation of environmental issues Job training, workforce readiness and other related educational and training programs
  • Incentives to retain or attract private development

Reporting and disclosure

An annual TIF Report is required to be prepared for each TIF district reflecting both the financial and development activities for the year. These reports are provided to each of the taxing bodies that are found within the TIF District. A Joint Review Board consisting of representatives of the taxing bodies also meets annually to review the TIF Report. A copy of the annual TIF Report is filed with the Illinois Comptroller’s Office following completion of the annual audit.

Want More Information?

More information about tax increment financing can be found at: Illinois Tax Increment Association

Annual TIF District Financial Reports are also available at: Illinois Comptroller’s Office Division of Local Governments.