There are a number of steps required in the creation of a TIF District.
The municipality identifies an area that is economically stagnant, experiencing declining values, or has other factors wherein new development or redevelopment is desirable, but unlikely to occur at a reasonable pace if no public investment were to be provided. The conditions supporting creation of a TIF District include:
- Blighted conditions, which includes dilapidation, obsolescence, deterioration, inadequate utilities and infrastructure or declining property values.
- Conservation conditions, which includes the circumstances where at least 50% of the structures in the proposed redevelopment area are 35 years or older and some blighting conditions exist.
- Industrial Park Conservation conditions – relatively high unemployment.
The Village Board authorizes the preparation of an Eligibility Study and Report, and the Redevelopment Plan and Project.
The County Clerk certifies the total equalized assessed valuation (EAV) of each individual parcel included in the TIF District. Property taxes computed off of a maximum of this certified initial valuation (base value) continue to be paid to the existing taxing bodies existing within the TIF District. Any property taxes computed on increases in EAV above the base value are distributed to the municipal TIF District Fund and set aside for public and private redevelopment project costs of the TIF District.
The TIF District is created through a series of ordinances.
The municipality makes public improvements and/or provides other assistance to encourage private development within the TIF District. The municipality can reimburse TIF eligible project costs on a pay-as-you-go basis or issue bonds using the incremental taxes to support the repayment of the bonds.
At the end of the TIF District (generally a maximum of 23 years), all of the TIF obligations should be paid off and the TIF District ends. Thereafter, the taxing bodies within the TIF District receive benefit of the incremental increase in the EAV in addition to the initial base value.