Upon the establishment of a TIF district, the current value of each property within the TIF district is used to define each property’s base amount. The property taxes paid on this base amount continue to go to the various taxing bodies as they had before the creation of the TIF District. However, any growth (or increment) in the value of the property over the base is captured by the TIF district. This increment is collected into a specific fund for use by the municipality to make additional investments in the TIF district. This reinvestment generates additional growth in property value, which results in even more revenue growth for reinvestment. At the conclusion of the TIF district, which is a maximum of 23 years based on Illinois law, all of the local taxing bodies then benefit from the reinvestment and redevelopment that resulted within the TIF district.
The Illinois TIF Act generally allows the use of TIF funds for the following:
- Property acquisition;
- The rehabilitation or renovation of existing public or private buildings;
- Infrastructure improvements;
- Relocation expenses;
- Financing costs, including interest assistance;
- Studies, surveys, and plans;
- Marketing sites within the TIF District;
- Professional services (such as architectural, engineering, legal, and financial planning); and
- Demolition and site preparation.
Please note that some restrictions may apply, so refer to the full State of Illinois TIF act for specific information related to TIF eligible expenses.