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Tax Increment Financing

Overview
Under the TIF program, the Village can designate a specific area (up to 300 acres) as a TIF District and capture a portion of the increased real property tax revenue generated within that district once development occurs. These captured funds are then directed toward financing public infrastructure improvements like water and sewer lines, roadway improvements, etc.

When a TIF District is established, the taxable value of the properties within the district is frozen at the current base value. As improvements and new developments occur within the district, the taxable value increases, generating additional property tax revenue. The revenue above the base value is redirected to a separate fund to finance the cost of infrastructure improvements.

Guiding Principles
The Village will consider TIFs on a case-by-case basis. The Village would generally support TIFs that:
  • Promote economic development
  • Facilitate targeted residential development
  • Contribute to area-wide growth and improvements
  • Enhance proposed projects
The following principles guide the evaluation of all TIF District requests:
  • TIF proceeds are invested in infrastructure projects that benefit the broader community.
  • TIF District boundaries are carefully designed to ensure they don't impede future TIF capacities in nearby areas.
  • TIF-funded improvements are completed within the timeframe of collecting TIF revenues.
  • TIF-funded improvements are publicly accessible through public streets and sidewalks, including ADA ramps.
  • TIF Districts are structured to minimize financial impacts on schools and other taxing authorities.
  • TIF Districts require developers to submit an application and pay an annual monitoring fee.
Other Considerations

Economic Development
  • TIF Districts that offer clear economic benefits such as job creation and retention.
  • TIF Districts that act as catalysts for additional development.
  • TIF Districts that remove obstacles to development or the installation of public infrastructure.
  • Real property tax incentives (CRA, Enterprise Zone) are discouraged when TIF is utilized.
Targeted Residential Development
  • TIF Districts that encourage the development of mixed-use projects with diverse housing options.
  • TIF Districts that revitalize underutilized or blighted areas.
  • TIF Districts that prioritize affordable housing initiatives, such as reserving a portion of residential units for LMI individuals and families, or individuals with special needs.
  • TIF Districts that address unmet community needs.
Area-wide Improvements
  • TIF proceeds are allocated to address various infrastructure needs in the area, including roadways, parks, recreational facilities, safety facilities, and water and sewer infrastructure.
  • Developers remain responsible for meeting roadway and facility requirements.
  • In growth areas, future developments must join existing TIFs or establish new ones if the existing infrastructure remains inadequate.
Project Enhancements
  • TIF is intended for cases where extraordinary circumstances exist. TIF proceeds can be used to support environmental remediation, demolition of structures, mitigation of excessive development costs, construction of flood protection systems, installing public infrastructure, environmental preservation efforts, and improving the surrounding streetscape for pedestrian and driver safety.
Non-school Tax Increment Financing
  • The Village strongly prefers the use of non-school TIF Districts to ensure the continued sustainability of the school district. Non-school TIF Districts allow school districts to receive the full amount of property taxes that would have been payable without the TIF exemption.
Timeline & Process Overview
Establishing a TIF is a thorough process that spans approximately 12 to 15 weeks due to the need for approvals at multiple levels.

Identification of Potential Project
Once a potential project is identified and progresses past the conceptual phase, project stakeholders, including property owner(s), developer(s), legal counsel, and engineers, meet to determine infrastructure needs and associated costs. This stage is important in determining the projects that TIF revenues would support, and which type of TIF is most appropriate.

TIF Terms
Based on the infrastructure and project needs, financial calculations would then be completed to determine what terms are appropriate. TIFs can be 100% for 30-years (in some cases up to 60-years), or customized up to that maximum level. TIFs greater than 75% and 10-years require the approval of the school districts, unless the TIF is a “non-school” TIF.

Determining Funding Sources
Negotiations occur to determine how the improvements will be initially funded (e.g. issuance of bonds, or reimbursement), and who is responsible for completing the construction. 

Drafting TIF Agreements and Legislation
TIF agreements and legislation must be approved before the beginning of construction.

Questions? Please direct questions to Jason Stanford, Development Manager, via email or by calling 614-873-3527 ext 119.