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As defined by state law, an area must have some of the following
characteristics to qualify for TIF: excessive vacancies, buildings below code
standards, lack of physical maintenance, generally a blighted area that is not
being invested in. For a complete list of criteria to qualify as a designated
TIF district, please click here.
The TIF district generates the funds needed to make necessary improvements
without raising taxes throughout the community or using other Village funds to
foster development. All the money generated by the TIF district must be spent
within the TIF district. A TIF generates money through increased equalized
assessed values (EAV) of the total property within the district. The EAV is the
County Assessor’s way of assigning similar taxes to similar structures and
spreading the property tax burden equally. Properties in TIF areas have lower
EAVs than similar uses outside the TIF areas because of the physical and
economic problems associated with the district. TIF districts, therefore,
contribute less to the overall tax base. Once the TIF district is designated,
the base EAV is calculated by totaling EAVs of all properties within the
district. As properties are improved, the EAV or values of the properties
increase. The difference between the base EAV and the new EAV, after
development, is the increment. No additional taxes are levied against properties
within the district.
For example, a TIF district is designated and the total EAV is $100,000. This is
the base. After a few years of development and improvements, the total EAV is
$150,000. The property taxes paid on the increment EAV of $50,000 can be used to
assist in funding the improvements outlined in the TIF district redevelopment
plan; and the property taxes paid on the base EAV of 100,000 is collected by the
varying taxing bodies.
A TIF can be in place for 23 years. After the TIF expires, all property taxes
are collected and distributed normally and the increment is no long collected.
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