Tax Increment Financing
Tax Increment Financing is a very effective but controversial method to help redevelop older areas within a city. It is poorly understood and often unfairly criticized. TIF is not a four letter word.
What is Tax Increment Financing?
The Illinois Tax Increment Financing Association http://www.illinois-tif.com/ provides an excellent explanation of TIF. Tax Increment Financing helps communities revitalize older and declining neighborhoods. A District is created following the requirements of the law. The new property tax generated in the new District can be used to assist development in the district, helping the area revitalize.
The City of Peoria, Illinois has developed ten TIF Districts. The value of these areas was initially very low. The TIF helped these areas redevelop, and the value of these areas has gone up on average 23% each year, much faster than the city as a whole. Nearby areas without the TIF have had little improvement in value. And of course the redeveloped areas created jobs and vitality.
Depending on the rate of taxation, taxes paid by the new development may be as much as or more than one half of the fair market value of new and redeveloped buildings over the 23 year life of the TIF. The city can provide some or all of that increment back to the developer to help make the project a reality.
TIF Districts incent redevelopers, spurring revitalization of older neighborhoods and increasing jobs. Cities have stimulated substantial new investment through public/private partnerships.
The Illinois Medical Clinic Building shown in the upper right of this post received a 4 million dollar TIF incentive to construct in downtown. The funds helped the developer pay for a parking deck. But for the TIF incentive, this great job and tax producing building would have gone to suburban areas. Instead it helps to revitalize the older central city.
We believe these numbers support the continued use of Tax Increment Financing. We want our older neighborhoods to thrive and improve, and TIF is one of the best ways to help that process.
More info at:
Illinois Tax Increment Financing Association http://www.illinois-tif.com/
TIF Illinois http://www.tifillinois.blogspot.com/
City of Peoria http://peoriatif.blogspot.com/
Warehouse District http://warehousedistrict.blogspot.com/
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