Polsky & Associates Ltd

What is a TIF District?

In Illinois, TIF Districts are created to encourage development in areas where development would not otherwise occur. A municipality can create a TIF District if it determines that the area to be included in the TIF District exhibits certain characteristics as defined in the Illinois Tax Increment Redevelopment Act. A proposed TIF District must meet those eligibility requirements to qualify and also meet a “butfor” test, a finding that development of those parcels would not be expected to occur without the creation of the TIF District.

TIF Districts have a typical life span of 23 years in Illinois. The TIF District’s base EAV is determined when the District is created. Taxes generated by the base EAV are paid to the overlapping taxing bodies during the life of the TIF District as if the TIF District did not exist. Tax increases above the base - the tax increment generated by new development in the District - are paid into a special TIF District fund to finance certain improvements related to development within that District.

Incremental EAV Growth From District Creation

The analysis examined the growth rate of TIF Districts in the City of Chicago by comparing the base EAV of the TIF District to the total amount of incremental EAV generated in each TIF District by the end of 2009. Certain TIF Districts were excluded, as described in the Research Methodology Section. For the 7 TIF Districts that terminated in 2008, as noted in the Research Methodology Section, 2007 EAV Data is the most recent EAV data for those TIF Districts, so 2007 data is used to calculate the incremental EAV growth. 10 Overall, we found that TIF Districts established in earlier years had higher percentage differences between their base EAVs and the incremental EAVs as compared to those TIF Districts established more recently. The following graph shows the change in incremental EAV compared to base EAV for all TIF Districts in the City.