Tax Incremental Financing (TIF) Districts

The Village is home to six active Tax Incremental Financing (TIF) districts. Three (#5, #6, #7) originated in the early 2000's, while the other three (#8, #9, #10) were formed in 2018. In addition, to providing a funding mechanism for certain infrastructure improvements, incentives may be available for desired projects that meet the objectives for 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 same property tax rates as those outside the district. The difference is that tax collection, over and above the "base value", are placed into a special fund that is 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 is used to create industrial parks through land acquisition and construction of infrastructure. 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 the development, the overlying tax district that benefits from the resulting increase 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 district’s property area must be blighted, in need of rehabilitation, or suitable as an industrial site.