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1. What is a Tax Increment Financing (TIF) District?

Tax Increment Financing (TIF) is a redevelopment tool authorized by State statute to help revitalize distressed areas by eliminating certain blighting conditions and instituting conservation measures in order to encourage private investment and to enhance the tax base. TIF originated in California in 1954, and is currently in use in some form in 48 states. It is a concept designed for municipalities of all sizes. There are over 400 Illinois communities that currently utilize TIF.

2. Will a TIF District in my area create a new tax?

TIF districts do not create taxes, but instead, create a mechanism that allows municipalities to utilize tax revenues to specifically target a business district that has been identified as being in need for revitalization.

3. What does a TIF District in my area mean to me?

Overall, the goal of a TIF district is to revitalize and redevelop a struggling business district. Successful TIF districts will result in creating opportunities for existing businesses as well as encourage new businesses to come to Westmont. This may result in greater investment in the appearance of our South Westmont Business District, as well as generate more tax revenue for the community.

4. How does a TIF District work?

Normally, property is taxed by several different governmental jurisdictions: the municipality, school districts, county, park district, etc. The taxes levied are allocated to each district in accordance with its tax rate. Under TIF, the increase in property taxes that result from new development are all allocated to the TIF fund. All taxing districts continue to receive property taxes based on the value of the property prior to the establishment of the TIF district (the Base EAV).

5. What can TIF funds be used for?

The improvements which may be funded through TIF are defined by State law and may include such items as:

• Roadway, stormwater and streetscape improvements;
• Relocation and demolition costs;
• Facade improvements, building rehabilitation;
• Land assembly;
• Infrastructure and utility extensions and enhancements;
• Costs of construction or rehabilitation of housing for low- and very-low income households; and
• Job training.

6. What are some of the most common myths concerning TIF Districts?

• MYTH 1 - PROPERTY OWNERS WOULD RECEIVE A TAX BREAK.
Property owners pay the same amount of property taxes they would have paid had they been outside of the TIF District, including any increases that result from increases in property value, or from tax rate increases from the various taxing districts.

• MYTH 2 - SCHOOL DISTRICTS WILL BE DEPRIVED OF REVENUES DURING THE LIFE OF THE TIF DISTRICT.
First, a school district, as well as the county, the municipality, and all other taxing bodies continue to receive the full amount of the taxes that they have levied on the “Base EAV” during the life of a district. Secondly, TIF districts can create money for schools. In Illinois, school districts continue to receive all the tax revenue they were entitled to before creation of a TIF district. Although schools usually lose General State Aid when assessed valuations increase, the incremental growth in property values within a TIF district is excluded from the property tax base when the State of Illinois calculates the amount of aid it awards to a school district. Therefore, the “poorer” a school district is, the more it stands to gain from having a TIF District.