TIF 101: What is a TIF district?

by Erin Nauta

LANSING, Ill. (July 1, 2019) – As the Village of Lansing considers the possibility of designating a new TIF district in the area of 172nd and Torrence Avenue, tax payers may be wondering what exactly a TIF district is, and why the Village, or Lansing citizens, would want one.

Revitalizing growth, retaining businesses

The State of Illinois permits local governments to designate specific areas within their jurisdictions for economic development though Tax Increment Financing (TIF). To qualify, those areas must be declining sectors within the city that would otherwise have no hope of competing for new businesses. TIF districts are often used for such projects as reviving a declining city center, a mostly-empty business district, or a disused industrial area. TIFs can help retain existing businesses that may be contemplating a relocation outside the city.

Improving blighted or under-performing sectors requires public investment to offset the cost of redevelopment, which often includes such improvements as new roads, sewers, and water mains, along with removal of decaying structures. The TIF concept requires local taxing bodies to invest some taxes today in expectation of seeing new or larger tax gains in the future. A Joint Review Board of all affected taxing bodies has input on the establishment of TIF districts, and a citizen appointee also sits on that Board.

Step by step

Here’s how a TIF district works: the Village creates an account for the distressed properties, and deposits a portion of the taxes those properties are already paying into that account. The portion of taxes put into the account is the “tax increment.”

All the money in the account must be used to improve the properties, whether it’s repaving a parking lot, replacing a roof, or demolishing a structure. The goal is that these improvements will entice investors to step forward to put substantial additional monies into redevelopment of the property, bringing up the property value, adding to the local economy, and creating jobs.

Building up a lively economic environment with a strong tax base takes time; a typical TIF district has a life span of 23 years.

The TIF concept offers a way to borrow from future growth to make improvements now, without increasing taxes on the citizens for necessary infrastructure. And since only a portion of a TIF district’s taxes are designated for improvements, the remaining taxes are still coming in to support local institutions such as libraries, schools, and parks that are tax-dependent.

Lansing’s TIFs

To date, the Village of Lansing has created TIF districts along Torrence Avenue (established 2014, expires 2037), Ridge Road (established 1988, expires 2023), Bernice Road (established 2009, expires 2032), and an industrial area on the western edge of town (established 1991, expires 2026). All are performing as expected.
If the Village of Lansing does create a new a new TIF district at 172nd and Torrence Avenue, the desired redevelopment would be a hotel site.

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4 thoughts on “TIF 101: What is a TIF district?”

  1. Could money subsidize public transportation? Pace comes in front of my home on Torrence, but there is no way to go to library, church, village office, new park or all those great little shops. I don’t qualify for handicapped bus and would love to sell my car. I’m sure seniors like myself and others would use a bus or trolley (cute touch) that would go from Torrence to Wentworth on Ridge… Good for business and the ecology.

  2. Good explanation of how this functions. A question: “All TIF districts are performing as expected”? Out of curiosity, but not necessarily skepticism, by what and whose measures? What are the results year over year in tax revenues and vacancy rates for a district that is almost completed, like the Ridge Road TIF? How was the figure of 23 years come up with?

    • Good questions, Daniel! Here is what Erin was able to find out:

      “The standard time span for a TIF district in Illinois is 23 years. Beyond that, each TIF district is unique. When a TIF district is created, a plan is proposed and desired results are established for that specific district—for example number of new jobs created, number of new businesses opened, level of increased tax income, etc. Who will measure the results and how is included in the initial proposal, which must be approved by the state under the TIF Act.

      “Incremental revenues for the TIF districts can be found in the Village’s Annual Financial Statements on the Village’s website, at https://www.villageoflansing.org/village_departments/finance_dept.php (scroll down for links). More information about TIF districts in general is available from https://www.illinois-tif.com/about-tif/.”

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