Tax increment financing is a special funding tool used by the city of chicago to promote public and private investment across the city. Funds are used to build and repair roads and infrastructure clean polluted land and put vacant properties back to productive use usually in conjunction with private development projects.
Tax increment financing or tif subsidizes companies by refunding or diverting a portion of their taxes to help finance development in an area or less frequently on a project site.
How to apply for tif money. The three analyses considered here are 1 tif revenue projections 2 tax revenues to the taxing districts with the project and the use of tif compared to revenues with no project tax impact analysis and 3 an analysis to determine if the amount of tif requested is necessary to make the project financially feasible this can be referred. In pay go tif the developer gets paid pack more slowly over time and carries the risk that the increment generated over the course of the. The amount of the tax increment that can be pooled and spent outside the tif district is limited to a percentage depending on the type of tif district.
Illinois law specifies a number of requirements that must be satisfied for an area to qualify for tax increment financing beginning with identifying the project area and the physical and economic deficiencies that need to be cured. Local tax increment financing local tif permits the use of a portion of local property and sales taxes to assist funding the redevelopment of certain designated areas within your community. Usually tif helps to pay for infrastructure improvements streets sewers parking lots in the area near a new development.
Tif funding 101 how it helps updated january 2019 1 25 17 tax increment financing tif is a public financing method that is used to help bring about improvements for redevelopment infrastructure and other community improvement projects. In pay as you go tif or pay go tif the developer pays for upfront development cost and is reimbursed for tif eligible costs twice annually as the increment becomes available when the tax base increases. Local jurisdictions seeking to establish a tif project must enact legislation that a designates the parcel s to be exempted from taxation b declares improvements to private property within the specified area as serving a public purpose c delineates the public infrastructure improvements to be made that will directly benefit the parcel and d specifies the equivalent funds to be created for those redirected monies.
Areas eligible for local tif must contain property classified as a blighted conservation or an economic development area or any combination. For example housing districts are exempt from the percentage limits so all tax increment can be spent outside the tif district so long as it is spent within the project areas and on. Funds are used to build and repair roads and infrastructure clean polluted land and put vacant properties back to productive use usually in conjunction with private development projects.
Tax increment financing or tif is one of those government terms that is equal parts confusing and important. Tax increment financing tif is a special funding tool used by the city of chicago to promote public and private investment across the city. Some restrictions may apply so review the full act for the list of tif eligible costs.