Tax Increment Financing

Purpose
 

Tax Increment Financing (TIF) is a financing tool that is available to all communities in the State of Illinois, as well as all communities in all but three states (Arizona, Delaware, and North Carolina) in the United States. TIFs help local governments restore their most run-down areas, or jump-start economically sluggish parts of town. With this tool, financially strapped local governments can make improvements they need, like new roads or sewers, and provide incentives to attract businesses, without tapping into general funds or raising taxes.

Funding
 

Without TIF benefits, a deteriorating area will not improve. Businesses are reluctant to sink capital into a lagging area, 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. The TIF District does not raise property taxes. The TIF sets aside property tax revenue increases resulting from property improvements, and normal Equalized Assessed Value (EAV) growth. Any tax revenue generated from the increased EAV within the boundaries of the TIF district can be used to fund improvements for the life of the TIF, usually 23 years.

Previous TIF's

The Village of Villa Park has used TIF in two project-specific cases:
   
  • Redevelopment of the northeast corner of Ardmore and North Avenues for the attraction and development of the Target store.
  • Redevelopment of the Ovaltine property into a $44-million high-end residential project.
Both of these projects are considered successful, since the village gains increased sales tax from the Target store, and there has been an influx of new residents with spending power into the village as a result of the Lincoln Property–Ovaltine project. A new housing product from which Villa Park residents can choose was also provided, due to the Ovaltine project. Without the help of TIF, which lent financial assistance in both of these cases, it is unlikely that these two projects would have been constructed.

For more information on these projects, please review the TIF links.