Tax Incremental Financing (TIF) Districts

The Village has three active Tax Incremental Financing Districts (TIF). In addition to providing a funding mechanism for specific infrastructure improvements, incentives may be available for desired projects that meet the objectives of the applicable project plan. 

What is TIF?
TIF Districts are special funding tools available to local municipalities that spur economic development, which otherwise would not occur. When a Tax Increment District (TID) is created, property owners within the district continue to pay the exact property tax rates as those outside the district. The difference is that tax collection, over and above the "base value," is placed into a special fund used to pay for project costs. Once all costs incurred by the creation of the TID are recouped by the additional tax increment created, the TID is closed, and the additional property taxes created are shared by all taxing entities. The use of TIF varies from project to project and district to district. In some cases, the Village uses TIF to promote the redevelopment of older parts of the community. In other cases, TIF creates industrial parks through land acquisition and infrastructure construction. In both cases, increased property tax collections are used to pay down debt services associated with project costs.

TIF is based on two working principles
  • New private development expands the municipality's tax base, thereby increasing property tax revenues.
  • If the municipality must provide public improvements to attract development, the overlaying tax district that benefits from resulting increases in the community's tax base should share in the cost of the public improvements.  
A city or village can designate a specific area within its boundaries as a TIF district and develop a plan to develop it. TIF projects must be approved by the municipality's planning commission and legislative body. At least 50% of the TIF Districts area must be blighted, in need of rehabilitation, or suitable as an industrial site.