Tax Increment Financing

TIF is an acronym for Tax Increment Financing. TIF is frequently used throughout the state to spur economic development, often where it might not occur otherwise. Illinois law allows units of local governments, typically municipalities, to designate areas within their jurisdiction as TIF districts.

These districts dedicate sales tax revenues and additional property tax revenues generated within the TIF district for improvements within the district to encourage new economic development and job creation. Funds may be used for costs associated with the development or redevelopment of property within the TIF district, allowing blighted, declining and under performing areas to again become viable, and allowing these areas to compete with vacant land at the edge of urban areas.

Projects in TIF districts typically include:

• Redevelopment of substandard, obsolete, or vacant buildings

• Financing public infrastructure improvements, including streets, sewer and water, in declining areas

• Cleaning up polluted areas

• Improving the viability of downtown business districts or rehabilitating historic properties

• Providing infrastructure needed to develop a site for new industrial or commercial use

Some TIF plans also divert tax dollars from one area or neighborhood to another.

There often is an opportunity cost to creating a TIF district. Freezing or diverting tax revenues to help one project can have implications for other projects or public services in the TIF district. Because TIF districts freeze the Equalized Assessed Value (EAV) in an area for the duration of the TIF district - 23 years, with an option for extension -  property tax revenue generated from the TIF district is split between the taxing body and the TIF for that period of time. This means that schools, libraries, parks and any other taxing bodies all have their tax collection from the area frozen at the level that existed when the TIF district was formed.

TIFs are used in all 50 states. As of 2020, there were more than 1,400 TIF districts in Illinois. Since 1979, more than 500 have been created in Cook County alone.

View a map of current Cook County TIFs here: https://maps.cookcountyil.gov/tifviewer/