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City of Galesburg
55 W. Tompkins Street
P.O. Box 1387
Galesburg, IL 61402-1387
309/343-4181

Tax Increment Financing

Roy Parkin, Director Community Development
Phone: 309-345-3652
Fax: 309-345-5704
roy@ci.galesburg.il.us
55 W. Tompkins Street
Galesburg, IL 61401

Brief History

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.

TIF EAV

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.
Relocation.
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 I map 2009 Amendment to the TIF Redevelopment Plan and Project, TIF 1

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 II map 2009 Amendment to the TIF Redevelopment Plan and Project, TIF 2

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 III map

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 IV map

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. TIF V map

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. TIF Interested Parties Registration Form