Tax Increment Allocation Financing (TIF) is a development device used in more than forty states. TIF assistance from a municipality or other unit of government provides financing, grants, bond issuance and subsidies to promote redevelopment within the community. A municipality must prepare a written plan for redevelopment, have it approved by the City Council, and then enter into redevelopment agreements with developers. The subsequent growth in property value and the related property taxes derived from the redevelopment project are shared with the developer to help underwrite the cost of the redevelopment project.
Tax increment financing in Illinois is known as the Industrial Jobs Recovery Law, 65 ILCS 11-74.6-1, et seq., and authorizes redevelopment of vacant industrial buildings, environmentally contaminated areas, areas with chronic unemployment, blighted property, conservation of property and industrial park conservation. When a municipality adopts tax increment financing, the taxing districts located within its jurisdiction (i.e., school districts, special units of government and others) must allocate their incremental property tax revenues derived from the enhanced value of the redeveloped property to help underwrite payment of the developers' project costs.
Whether you are a municipality, a property owner or a developer, Kelty Law Offices can guide you through the process to meet your needs. The following are key issues for consideration in the process.
- How can those needs be financed?
- What is the potential for alternative financing sources?
- What is the need for public intervention?
- What is the potential impact on other taxing districts?
- What is the project eligibility?
- What is a feasibility study?
- What is a redevelopment agreement?
- What is the potential for adoption of approving TIF ordinances?
Tax Increment Finance is one of the most used development devices available in current municipal law. The TIF Act, along with others, offers substantial tools to cities, villages and other units of local government. Included are the following:
- Tax Increment Allocation Redevelopment Act (the “TIF Act”), 65 ILCS 5/11- 74.4-1 et seq.
- Economic Incentive Agreements (the “Economic Incentive Provisions”), 65 ILCS 5/8-11-20.
- Special Service Area Tax Law (the “SSA Act”), 35 ILCS 200/27-5 et seq.
- Local Government Debt Reform Act (the “Local Government Debt Reform Act”), 30 ILCS 350/1 et seq.
- State Finance Act (the “State Finance Act”), 30 ILCS 105/62-18.
- Bond Issue Notification Act ( the “Bond Issue Notification Act”), 30 ILCS 352/1 et seq.
- Property Tax Extension Limitation Law (the “Property Tax Extension Limitation Law”), 30 ILCS 352/1 et seq.
In addition, a municipality can utilize tax increment revenue notes; special service area bonds; TIF bonds (both general obligation and alternate revenue); and pledges of sales taxes or the like.
