Tax Increment Finance Districts

Tax Increment Financing, or TIF, is a tool state lawmakers gave local governments more than 30 years ago to help them restore declining areas. With this tool, municipalities can invest in necessary infrastructure, provide financial incentives, and generally make areas ready for redevelopment.  TIF works by establishing a district and calculating the current assessed value (the value that the assessor uses to calculate your tax bill) for the entire area.  All of the taxing districts, such as the City, County, School District, and other special districts, continue to collect this amount of tax money for the life of the TIF, generally 23 years.  The municipality then begins investing in the district to attract new development and increase property values.  The tax money generated by these new developments is then captured in a TIF fund for reinvestment in the district.  These funds must be used within the district, encouraging even more investment and the creation of new tax “increment.”

TIFs help an area in many ways.  The funds can help update failing infrastructure, provide public facilities such as parking decks, create new commercial spaces to attract retail, and invest in new projects that bring jobs, customers, and, in turn, higher tax generators that help a local economy. TIF designation also helps retain existing businesses that might otherwise find more attractive options elsewhere. The jobs and additional investment — private and public — mean more money for the community. TIF also helps to overcome the extraordinary costs that often prevent the development and private investment from occurring on environmentally contaminated sites or aging, and often historic, structures that cost more to update than new construction. As a result, the TIF area itself improves, and property values go up.

Once a TIF District is created, the City embarks on the creation of programs to accomplish the redevelopment of these areas.  Information about these incentive programs can be found on the City’s Business Portal.

Frequently Asked Questions about TIF Districts

 TIF Compliance Reporting

State law mandates municipalities that maintain a TIF district must file an annual report with the Illinois Comptroller.  The City of Champaign’s reports can be found on the Illinois Comptroller’s website.