The Community Development Department administers a number of incentives designed to support and encourage quality development and redevelopment to enhance the economic vitality of our community.
Downtown Facade Redevelopment Grant Program
Overview: The Downtown Facade Redevelopment Grant Program is a collaborative effort between the City of Galesburg (City) and the Galesburg Downtown Council (GDC). The Program is administered by the Community Development Department, with review authority provided by the Facade Advisory Committee (FAC) and final approval through the Galesburg City Council.
Objectives: The Downtown Facade Redevelopment Grant Program has been designed to encourage architecturally appropriate improvements to commercial facades through the use of higher quality products. The goal is to promote the attraction and retention of business operations and enhance the interest in visiting the downtown area. Crowded sidewalks indicate healthy economic activity and a safe environment for people to come and enjoy.
Eligibility: Any property owner (or occupant of the property with written consent of the owner to participate in the program) may propose a facade redevelopment on a taxable building within a designated geographical area known as the Downtown Area, which has 50% or more of its floor space devoted to a commercial use. Property insurance, real estate taxes and City service accounts must be current at the time of application for funding. A signed Facade Grant Agreement will be required if the application is approved by City Council, which will be recorded in the Knox County Office of Recorder of Deeds.
Funding limitations: For projects located in both the Downtown Area and the Special Service area, the total project cost for any proposed facade project must be a minimum of $40,000 to be eligible. The City and GDC are willing to participate in a reimbursement of 50% of the total project cost, up to a maximum of $40,000, subject to availability of funds. The applicant is required to inject a minimum of 10% owner’s equity into the Facade project.
For those projects located in the Downtown Area, but not within the Special Service Area, the proposed facade project cost must be at least $20,000 to be eligible. The City is willing to participate in a reimbursement of 25% of the total project cost, up to a maximum of $20,000. The applicant is required to inject a minimum of 10% owner’s equity into the Facade project.
Downtown Facade Redevelopment Grant Program Handbook
The Illinois Enterprise Zone Act (20 ILCS 655) contains provisions for the Illinois Enterprise Zone program that is administered by the Illinois Department of Commerce and Economic Opportunity (DCEO). An Enterprise Zone is a creative partnership between state and local governments, local taxing bodies, business, labor and community groups. The purpose of the zone is to stimulate business investments and promote the creation of jobs by offering various tax incentives and other benefits to new and existing businesses that will, or are, located in the Enterprise Zone.
The City of Galesburg’s Enterprise Zone (GEZ), initially certified for 20 years in July 1984, has an emphasis on commercial and industrial development and diversification. The State has approved a ten year extension for the GEZ that expires on June 30, 2014. The GEZ is a geographically defined area that originally covered 1.5 square miles, the zone boundaries have been amended many times of the years and currently encompasses 3.4296 square miles (Enterprise Zone boundary map). Additional amendments could be considered for a qualified business and sites that would provide an immediate substantial benefit by creating or retaining specific jobs.
The Enterprise Zone program offers a number of incentives to encourage businesses to locate or expand in the zone. Some incentives require a business to meet certain requirements for job creation/retention, amount of investment and the type of business:
STATE OF ILLINOIS INCENTIVES MAY INCLUDE:
- Enterprise Zone Machinery & Equipment Tax Exemption- a State exemption of 6.25% for all tangible personal property to be used or consumed in the zone in the process of manufacturing or assembly of tangible personal property for wholesale or retail sale or lease. This exemption is good for 5 years, and is contingent upon the eligible business investing $5 million and creating 200 full-time jobs; OR investing $40 million and retaining 2,000 full-time jobs; OR investing $40 million and retaining at least 90% of the full-time existing jobs.
- Enterprise Zone Utility and Telecommunications Tax Exemption- a 100% exemption of the state tax on gas and electricity and the Illinois Commerce Commission’s .1% administrative charge for 5 years. This exemption is contingent upon the eligible business investing $5 million and creating 200 full-time jobs; OR investing $20 million and retaining 1,000 full-time jobs.
- Enterprise Zone Investment Tax Credit- a State credit of .5% is allowed a taxpayer who invests in qualified property (machinery, equipment, building) in an enterprise zone.
- Dividend Income Deduction- Individuals, corporations, trusts and estates are not taxed on dividend income received from corporations doing substantially all their business in a zone.
- Job Tax Credit- a business is allowed a credit of $500 per eligible employee hired to work in the zone during the taxable year. To be eligible, a minimum of five eligible employees must be hired during the taxable year.
- Interest Deduction- Financial institutions are not taxed on interest earned on loans for development in a zone.
GALESBURG INCENTIVES MAY INCLUDE:
- Real Estate Tax Abatement- all local taxing bodies are currently participating to provide a 100% property tax abatement on any increase in the equalized assessed value resulting from a project. The abatement is for a 10-year period and is not to exceed $1 million abated per taxing body. Improvements can be in the form of new construction, substantial renovation or expansion of an existing building. The abatement is only given if the project creates jobs and does not reduce the prior assessed valuation. Real Estate Tax Abatement Application
- State and Local Sales Tax Exemption- on building materials purchased within the State of Illinois and incorporated into real property located in the enterprise zone. Sales Tax Exemption Application
- Construction Permit Fee Waiver- PERMITS ARE REQUIRED, but the fee is waived for building, electrical, plumbing or heating permits (City Inspection Division); Water Service Tap Fees and Street & Terrace Opening Fees (City Public Works Dept); and Sanitary Sewer Tap Fees (Galesburg Sanitary Dist).
Tax Increment Financing:
The Tax Increment Allocation Redevelopment Act (65 ILCS 11-74.4-1) was passed by the Illinois General Assembly in 1977. The Act authorizes Illinois Municipalities to designate eligible areas (redevelopment areas) for a period of 23 years that can then be developed or redeveloped through Tax Increment Financing (TIF). NOTE: An additional 12 years may be added, but needs approval through the Illinois General Assembly.
TIF is designed to encourage private investment in areas that have proven to be underdeveloped and would not have received such investment "but for" TIF assistance. If an owner or developer has a project in mind, but there is a gap in the financing to get the project done, TIF assistance may be an option. A Developers Agreement is required, which will need City Council approval.
TIF is not an increase in taxes. It is only a re-allocation of how they are used. Increases in property taxes experienced by property owners are due to reassessment and rate increases, not TIF.
Base EAV and Tax Increment
TIF calls for local taxing bodies to make a joint investment in the development or redevelopment of an identified, underperforming area. When a TIF redevelopment project area is created, the Knox County Clerk certifies the current Equalized Assessed Value (EAV) of the property in the area, which is known as the Base EAV.
Establishment of a TIF does not reduce property tax revenues available to the overlapping taxing bodies. The property taxes paid on this base EAV continue to be distributed to the various taxing bodies as they would if the TIF did not exist, with the amount of this revenue declining only if the base declines (something that the TIF is expected to keep from happening) or the tax rate goes down.
When new development, rehabilitation or improvements occur in the project area, the assessed value of those properties are increased above the initial base EAV. This is called the Tax Increment. The Tax Increment is then deposited into a Special Tax Increment Allocation Fund for use by the City to make additional investments in the TIF project area. This reinvestment generates additional growth in property value, which results in even more revenue growth for reinvestment.
Redevelopment Plan and Project
Each TIF area has a Redevelopment Plan and Project document that defines the geographic area, identifies redevelopment projects, discusses a comprehensive program for (re)development, provides an itemized list of estimated project costs and provides evidence the project area as a whole has not been subject to growth through private investment and would not reasonably be anticipated to be developed "but for" the adoption of the TIF Plan.
Joint Review Board
The Joint Review Board (JRB) is made up of one representative from each taxing authority affected by a TIF (i.e. school district, community college, sanitary district, county, etc.) The JRB also includes at least one member of the general public. The JRB meets annually to review the progress of each TIF. Also, before a TIF is created, the JRB must review the Redevelopment Plan for the area.
Typical TIF projects
TIF funds may be used for costs associated with the development or redevelopment of property within the TIF, allowing blighted, declining and underperforming areas to again become viable. Typical projects include:
- The redevelopment of substandard, obsolete vacant buildings.
- The development of residential housing in areas of need.
- Cleaning up polluted areas.
- Improving the viability of downtown business districts.
- Financing general public infrastructure improvements, including streets, sewer, water, and the like, in declining areas.
- Rehabilitating historic properties.
Types of Eligible Costs
The eligible uses for TIF funds are provided in Illinois’ Tax Increment Allocation Redevelopment Act (65 ILCS 5/11-74.4-1 through 11-74.4-11):
- The administration of a TIF redevelopment project.
- Rehabilitation or renovation of existing public or private buildings.
- Construction of public works or improvements.
- Job training.
- Property Acquisition
- Studies, surveys, plans and specifications.
- Marketing sites within the TIF
- Professional services, such as architectural, engineering, legal and financial planning.
- Demolition and site preparation.
Some restrictions may apply, see the full Act for list of TIF-eligible costs.
This information was compiled by the City of Galesburg Community Development staff utilizing information from the Illinois Tax Increment Association website and the Tax Increment Allocation Redevelopment Act (65 ILCS5/11-74.4).
The City of Galesburg currently has five TIF’s
TIF I Downtown was created April 1, 1985 for the purpose of renovating the Custer Hotel into the Kensington retirement facility. In 2007, through cooperation of all taxing bodies, the Illinois legislature approved the extension as allowed by State Statute for the maximum 35 year term. The tax increment, currently used to reinvest in the area, will begin to be distributed to all taxing bodies in the year 2022. TIF has been integral in helping to rejuvenate the Downtown. Projects have included the Dollar General, First Midwest Bank, Seminary Street loft apartments, Discovery Depot Children’s Museum, the downtown storm sewer project, complete reconstruction of South Kellogg Street (Main to Simmons).
TIF II East Main Street was created December 29, 1986 to acquire properties and assemble land for redevelopment. In 2007, through cooperation of all taxing bodies, the Illinois legislature approved the extension as allowed by State Statute for the maximum 35 year term. The tax increment, currently being used to reinvest in the area, will begin to be distributed to all taxing bodies in the year 2023. Projects have included the Holiday Inn, Taco Bell, Mobil Oil, Turnberry Village apartments, Kiwanis Park improvements, Hy-Vee gas station, reconstruction of Washington Street (Michigan Ave to Virginia), widening and signalization of Michigan Ave (at Main Street) and reconstruction of Ohio Ave (Main to Berrien).
TIF III Regency was created in 1999 for the 23 year term. This TIF is currently set to expire on December 31, 2022. Any tax increment generated will be distributed to all overlapping taxing bodies in 2024.
TIF IV was established by the City of Galesburg on June 2, 2008 and is contiguous with both TIF I and TIF II. The City’s role in the redevelopment effort includes land acquisition , as needed, to facilitate redevelopment activity and public improvements in the downtown area as well as improvements needed to upgrade the appearance and function of the East Main Street gateway into the community.
TIF V was established by the City of Galesburg on June 2, 2008 and is contiguous to TIF II. The creation of TIF V was to facilitate the ongoing efforts to revitalize the area east of the I-74 interchange.
Interested Parties Registry
An organization or resident seeking additional information on a proposed new TIF district or potential amendments that may occur in existing TIF districts, must register as an Interested Party. An organization must also submit a copy of a one-page statement describing the organization's current operations in the City. A resident must also submit a copy of a current driver's license, lease, utility bill, financial statement or such other evidence as may be acceptable to establish the individual's current City residency. Interested Parties will be sent notices required under the Act with respect to the applicable Redevelopment Project Area.