TAX INCREMENT FINANCING

Tax Increment Financing (TIF) uses increased property tax revenues (resulting from private investment, i.e. new construction or rehabilitation) to repay debt incurred for the cost of a residential, commercial or industrial project in a designated TIF district.  TIF is intended to assist private development projects that will redevelop and revitalize a blighted or underutilized property and increase employment opportunities within a community.  The maximum term is 20 years.  The amount of any approved TIF should be the least amount necessary for the feasibility of the proposed project.  TIF is not to be used to replace debt or equity otherwise available at market rates.

To initiate the TIF process, an application is submitted to the Redevelopment Authority which then reviews the proposed project.  Upon approval by the Redevelopment Authority, the application is distributed to the local taxing bodies, including, at a minimum, the local municipality and school district for review.  The next step in the process is the preparation of a Project Plan which is then presented to the Taxing Bodies for approval.

The TIF district is created when one or more of the taxing units of local government adopt the plan.  A TIF district may consist solely of a single tax parcel or it may encompass a larger area provided that it consists of contiguous tax parcels.  Under the State Act, the Redevelopment Authority is designated as administrator of the TIF Plan.  It holds and invests the incremental tax revenues and repays the project debt.