Stimulating Economical Development
Tax Incremental Financing is an economic development tool enabling the village to finance projects that stimulate development or redevelopment that would not otherwise occur without public assistance. The area where this tool is used is designated as a Tax Incremental District or TID.
The public improvements needed within a TID may include the construction of streets, the installation of water and sewer services, or, in the case of redevelopment, the razing of old buildings.
Financing the Improvements
To finance the cost of the improvements, property taxes levied on any increased property value within the district (referred to as the value increment) are diverted from the overlying taxing jurisdictions (school district, vocational district, county, and village). The diverted revenue is placed in a special account to pay for the publicly funded improvements in the district.
After all costs are repaid, the district is dissolved, and the various taxing units again receive taxes based on the full value of the property, which, by then, usually is substantially higher than before the district was formed.