The ABC’s o TIF:
Beneftting All O Chicago
What is TIF?
TIF stands or Tax Increment Financing. In short, the TIF programis an investment in Chicago’s uture that has already made the city abetter place to live and work. It works by promoting developmento commercial, industrial, and residential sites across the city throughpublic-private partnerships.TIF is used in areas o the city that have struggled to attract or retainhousing, jobs and commercial activity, without the City being orced toraise property taxes or diverting unds rom other City projects to makethese improvements happen.The program fnances public and private projects that includerehabilitating existing buildings or new uses; residential developments;retail shopping centers; helping businesses expand or relocate in thecity; unding the creation o public parks; and constructing new schools,libraries, police and fre stations.Since TIF was frst used in Chicago in the 1980s, more than 140 TIFdistricts have been established in the city. They have generated $8.3billion in private investment; created or retained 66,000 jobs; built17,000 residential units (including aordable and CHA replacementunits); and created or rehabbed 35.2-million square eet o commercial,industrial and ofce space.
How does TIF work?
TIF is used to encourage development and investment where it wouldnot otherwise occur.The basic idea behind TIF is similar to rehabbing a home. Just asrehabbing one’s home makes it both nicer to live in and worth moremoney, TIF helps improve the quality o lie in a neighborhood andmakes homes and other buildings in that neighborhood increase invalue, providing both immediate and uture benefts or residents.TIF works by allowing the City to capture property tax revenues abovethe base tax rate that existed beore the area was designated as a TIFdistrict.When a TIF is created, property values increase due to the newdevelopment and investment in the neighborhood. The new propertytax dollars that result (also called the “increment”) are set aside to helppay or community projects and create incentives or private investmentwithin that specifc TIF area, ensuring that new dollars are reinvested inthe same community where they were collected.
How is a TIF district created?
The process by which TIF districts are created is very public and cantake between six months to one year to complete to ensure manyopportunities or review and input by the public, experts and Cityofcials. Under Illinois State Law, TIF districts are designated as either a“blighted” or “conservation” area.“Blighted” areas are those that have been deprived o investment or many years and have experienced a decrease in shopping, housing andemployment options or neighborhood residents.“Conservation” areas are created to prevent the decline o major neighborhood centers beore it occurs, by working to retain existingbusinesses and housing, and attracting new ones.Beore an area can even be considered or a TIF district, an eligibilitystudy is conducted to determine i the area meets the specifcconditions required to be designated as “blighted” or “conservation.”At the same time, a redevelopment project and plan is created thatpresents the City’s goals or the proposed TIF district. The City andlocal alderman host at least one public hearing to gather input on theproposal. An advisory joint review board then meets to review andcomment on the proposal. The joint review board consists o a member o the public and representatives rom each taxing body within the areaincluding Cook County, Chicago Public Schools, and the Chicago ParkDistrict. Ater considering the comments received, the City may thenmake a recommendation to advance the proposal to the CommunityDevelopment Commission, which will consider the proposal at apublic meeting. I approved by the CDC, the proposal is introducedinto the City Council, considered at a public hearing by the Council’sCommittee on Finance, and voted on by the ull City Council.
Does TIF increase the taxes in other partso the city?
No. The main beneft and appeal o TIF districts is that they are sel-sustaining and allow the City to pay or major improvements projectswithout raising taxes or having other parts o the city pay or thoseimprovements. In act, TIF helps grow the City’s overall tax base – andthereore helps keep everyone’s taxes lower than they otherwise wouldbe – by bringing new properties and new businesses to the tax rolls thatwould otherwise not exist.
I I live in a TIF district, does the TIFincrease my taxes?
No. TIF is not a new tax, but it works by putting the natural increase inproperty taxes to work in that specifc neighborhood. Homeowners maysee increases in property taxes, but only in proportion to increases in thevalue o their homes – exactly the same as i they were not in a TIF.
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