TIF Districts

The City of Mt. Vernon currently has three TIF Districts, the Downtown TIF, the East Side TIF and the West Side TIF. The city uses TIF financing to provide incentives through development or redevelopment agreements on a project-by-project basis.

What is Tax Increment Financing (TIF)?

Tax increment financing is an economic development tool used to help local governments improve historic districts, restore run-down and blighted areas or jump-start economically challenged parts of town. TIF funds help municipalities to make needed improvements, like new roads and sewers or provide incentives to attract development and new businesses. TIF can help to overcome the costs that often prevent development from occurring. 

How Do TIFs Work?

When a TIF district is created, the value of the property (equalized assessed valuation of EAV) in the defined area is "frozen" and established as the base amount for taxing purposes. The property taxes paid on the base amount continue to go to the various taxing bodies (schools, libraries, etc.). The local taxing bodies are all involved in the TIF approval process. 

It is the growth of the value of the property over the base that generates the tax increment. This increment is collected into a special fund managed by the city and used to make additional investments in the TIF area. This reinvestment generates additional growth in property value, which results in even more revenue growth for reinvestment.

How Long Does a TIF District Last?

Illinois law allows a TIF district to exist for a period of up to 23 years, which can be extended up to 13 more years if certain conditions are met. After the 23 years are up, the properties in the TIF district are released to the tax rolls so that the taxing bodies are able to collect tax revenues based on the updated value of the properties. To learn more about Tax Increment Financing, visit the Illinois Tax Increment Association's web page. 

What Type of Projects Are TIF Funds Used For?

TIF funds may be used with costs associated with the development or redevelopment of property that is within the TIF district. Typical projects include:

• Redevelopment of vacant buildings
• Financing of general public infrastructure improvements, such as streets, water, sewer, etc., in declining areas
• Cleaning up polluted areas
• Improving downtown business districts
• Rehabilitating historic properties
• Providing infrastructure needed to develop a site

How Can TIF Funds Be Used?

The uses of TIF funds are provided in the Illinois Tax Increment Allocation Redevelopment Act, also know as the TIF Act. The Illinois TIF Act generally authorizes that TIF funds may be used for:

• Acquiring property
• Administration of a TIF redevelopment project
• Rehabilitation or renovation of existing public or private buildings
• Construction of public works or improvements
• Relocation
• Job training
• Financing costs, including interest assistance
• Marketing sites within the TIF District
• Studies, surveys and plans
• Professional services, such as architectural, engineering, legal and financial planning
• Demolition and site preparation

Some restrictions may apply, please review the TIF Act for a full list of TIF eligible costs.