Tax Increment Financing (TIF): Overview, Plans & Reports
Tax Incremental Financing (TIF) helps local governments attract private development and new businesses. New businesses mean more jobs, more customers, and, in turn, more private investment. TIF designation also helps retain existing businesses that might otherwise find more attractive options elsewhere. The jobs and additional investment --- private and public --- mean more money for the community. TIF also helps to overcome the extraordinary costs that often prevent development and private investment from occurring on environmentally contaminated and other properties, and it’s also used where infrastructure is inadequate or there is obsolete development. As a result, the TIF area itself improves and property values go up.
Since the Federal and State governments have greatly reduced their support for economic development, Tax Increment Financing permits municipalities to accept some of this responsibility without raising local property taxes.
Without TIF benefits, a deteriorating area will not improve. Businesses do not sink capital into decaying areas and most local governments cannot afford the needed costly improvements without raising taxes. But in a TIF district, dollars for improvements are generated by businesses --- new and old --- attracted by the TIF benefits. Specifically, money for infrastructure improvements and other incentives comes from the growth in property tax revenues --- the tax increment.
Urbana’s TIF Plans
Urbana currently has three TIF districts. Each TIF has its own plan for its redevelopment area. Links to the latest TIF plans and a map showing the boundary areas of each of the TIF’s are shown below:
Urbana’s TIF Reports
TIF Reports are filed for each past Fiscal Year with the Illinois State Comptroller's Office. Reports may be found both on the Comptroller's public documents website and under Financial Reports on the City's website.
A retrospective of the two Downtown TIF Districts can be viewed at Downtown TIF Retrospective.
Illinois TIF Laws
The current operational Tax Increment laws in Illinois are:
The Tax increment Allocation Redevelopment Act (65 ILCS 5/11-74.4.1 etc.) This is Illinois’ original and most frequently used TIF law. It was approved in 1977 and has been amended frequently since that time. A major reform of this statute was approved by the General Assembly this spring (1999), was signed by Governor Ryan on August 11, 1999 and will become law on November 1, 1999.
The Industrial Jobs Recovery Law (65 ILCS 5/11-74.6-5 etc.). The Illinois General Assembly enacted this law in 1994. It differs from the basic TIF law, cited above, primarily because it focuses on industrial projects in areas of high unemployment and on properties in need of environmental cleanup rather than restoring "blighted" or "Conservation" areas. The General Assembly recently renewed the law through the year 2010 while adding many of the same reforms applied in 1999 to the basic TIF law.
There are various financial incentives that may be available from the City for projects or activities that are considered “TIF eligible” as defined under the Illinois Tax Increment Allocation Redevelopment Act. Generally, eligible expenditures include direct use of tax proceeds for a broad range of public and private purposes or for certain incentives to spur private sector investment. Recent amendments to the Act include specific restrictions on these uses. According to the Act, eligible uses of such funds include the following:
planning, architectural, engineering, legal and other services to cover costs of studies, surveys, development of plans and specifications, and implementation and administration of this Redevelopment Plan;
staff costs to implement and administer this Redevelopment Plan, including costs to create the Redevelopment Project Area. Annual administrative costs shall not include general overhead or administrative costs of the City that would have still been incurred by the City if the Redevelopment Project Area had not been adopted;
the cost of marketing sites within the Redevelopment Project Area to prospective businesses, developers, and investors;
property assembly, demolition, and site preparation costs, including but not limited to acquisition of land and other property, real or personal, demolition of buildings, and site preparation activities including certain site improvements.
private and public building rehabilitation and public building replacement costs, including costs of rehabilitation, reconstruction or repair or remodeling of existing public or private buildings, fixtures, and leasehold improvements; and the cost of replacing an existing public building if the site is to be used for private investment.
public works construction and improvement costs, excluding the cost of constructing a new municipal public building that is not intended to replace an existing public building;
costs of job training and retraining projects, including the cost of “welfare-to-work” programs implemented by businesses located within the Redevelopment Project Area;
financing costs, including but not limited to all necessary and incidental expenses related to the issuance of obligations and which may include payment of interest on any obligations issued hereunder, including interest accruing during the estimated period of construction of any redevelopment project for a period not to exceed 36 months;
other taxing districts’ capital costs for a redevelopment project, to the extent accepted and approved by the municipality by written agreement in furtherance of the objectives of the Redevelopment Plan and project;
relocation costs, to the extent the municipality determines that relocation costs shall be paid or are required to be paid by Federal or State Law;
payments in lieu of taxes;
costs of job training, retraining, advanced vocational education or career education, including but not limited to courses in occupational, semi-technical or technical fields leading directly to employment and subject to additional restrictions; and interest cost reimbursement for up to 30% of annual interest paid on private financing of qualified redevelopment projects, subject to specific restrictions as provided in the Act.