1. Tax Increment Thomas Chapman Raymond James John Repsholdt Ehlers Steven Langert Consolidated High School District 230

2. What is Tax Increment Financing (TIF)? A tool to help local governments restore their most run-down areas or jumpstart economically sluggish parts of town. TIF’s help local governments attract private development and new businesses. TIF’s help local governments make the improvements they need, like new roads or new sewers and water mains. Allows redevelopment costs to equal green grass development costs, therefore “incenting” redevelopment.

3. What is a "Tax Increment"? It is not a tax increase. It is the difference between the amount of property tax revenue generated before a TIF district is established and the amount of property tax revenue generated after the TIF district has new development. TIF does not reduce property tax revenues available to other taxing bodies. Only property taxes generated by the incremental increase are available for use by the TIF.

4. What is a "Tax Increment"? Property Tax Increment Example #1

5. What is a "Tax Increment"? 2007 Tax Bill Land EAV $52,088 Building EAV $0 Tax Exemption $1,708 Total EAV $50,380 Tax Rate 10.264% Tax Bill $5,171 TIF $ $0 Property Tax Increment Example #2 2008 Tax Bill Land EAV $57,743 Building EAV $235,959 Tax Exemption $0 Total EAV $293,702 Tax Rate 10.264% Tax Bill $30,155 TIF $ $24,974

6. How does TIF work? Community Creates TIF. Freezes EAV at current levels for all taxing districts. Community undertakes public improvements/ economic development incentive programs. Developer, local businesses, residents make improvements. EAV increases. Community pays developers/itself for improvements/incentives.

7. Important to Remember “But For” Concept Gap in Financing/Extraordinary Risk (Without TIF, the Project is Not Possible)

8. Required TIF Reports Feasibility Report Eligibility Report Redevelopment Plan and Program Housing Impact Study (required, if large numbers of residential units in proposed TIF)

9. Feasibility Report Required by law if the TIF has more than 75 occupied residential units or more than 9 relocations of occupied residential units. Articulates need for Housing Impact Statement. Definition or purpose to determine whether TIF is appropriate (financial definition as opposed to physical or criteria evaluation of the area).

10. Eligibility Report Review and document for criteria for Eligibility Blighted Conservation Combination of Blighted and Conservation Industrial Conservation Within ½ mile of STAR Line (new)

11. Data Inputs Rating survey Tax information City information Records Consultant studies State and federal information

12. Redevelopment Plan and Project Plan Goals Objectives Program Policy Implementation strategy Budget

13. Redevelopment Plan and Project Certifications and Findings Project Cost Evidence “But For” met Assessment of Financial Impact on Taxing Districts Sources to Pay Terms and Obligations of Debt (if any) EAV of the Redevelopment Project Area EEO Compliance Industrial Conservation Compliance Not Subject to Growth and Redevelopment on its own Dates of Completion (23 Years or less; may be extended up to 35 years with approval of State) Housing Study findings Agreement with Comprehensive Plan No golf course

14. Other Considerations Must be 1.5 acres (also large enough to generate enough increment to be worthwhile) Increment must be projected over the period of the TIF Vacant property should be subdivided prior to adoption of TIF Unincorporated property should be annexed prior to adoption of TIF Must have Map of Area Must have Legal Description

15. Housing Impact Statement Part One Data Single vs. multi family Number and type of rooms Inhabited or uninhabited Racial and ethnic composition Part Two Data Residential Units to be removed Relocation Assistance Plan Availability of Housing for Relocation/type, location, cost Type and extent of relocation

16. Housing Impact Statement Low and Very Low Income requires relocation per the Uniform Relocation Assistance and Real Property Acquisition Polices Act of 1970 and its regulations. Municipality must make good faith effort to relocate in or near redevelopment project area in municipality.

17. Schools Students added to system as the result of activities in the TIF must be reimbursed; same for patrons of the library district. Municipality can assist schools with infrastructure through TIF. Municipality can pay for job training/retraining and welfare to work. Schools do not lose full EAV advantage because of State aid reimbursement (calculation on base not new EAV). If tax-capped, schools may not lose any funding. Begin discussions with schools early. Municipality may be able to out-vote them, but you are in the community together. Other than student reimbursement and justified capital improvements, Municipality must make payments to all taxing districts from surplus, not just schools.

18. Adoption Process Interested Parties Registry Notification of Property Owners and Residents within 750 Feet Joint Review Board Process Publication of Notices Public Hearing Adoption 100-120 days

19. TIF Administration and Management Annual Reporting Joint Review Board Meetings Make and encourage improvements in TIF District

20. TIF Eligible Expenses Only certain costs are allowed to be reimbursed Examples  Cost of studies and surveys;  Costs associated with land acquisition and site preparation including demolition and environmental remediation;  Costs of rehabilitation and repair of buildings;  Costs of construction of public works or improvements (street, water, sewer);  Costs of job training and retaining programs;  Relocation costs; and  Certain financing costs Any reimbursement of expenses is based on approval of the corporate authorities.

21. TIF Ineligible Expenses Costs of new, private construction and purchase of equipment are non-eligible costs. New municipal public buildings. Golf courses. Demolition, removal, or substantial modification of a historic resource is a non- eligible cost, with some exceptions.

22. Financing TIF Improvements Reimburse developer on a “pay as you go” basis. Issue bonds to be repaid from TIF Increment, and therefore, pay for eligible project cost up- front. Combination of the above methods. The developer pays until property tax is generated, then the Village issues bonds using the increment for payment of bonds. In this case part of the developer’s finance charges can be reimbursed.

23. Case Study Consolidated High School District #230 Payments made to District by Municipalities approx $700,000 GSA Saving due to TIF 25,000 Property Taxes of Increment At District’s total rate approx $1,536,000