Thursday, September 17, 2020

City of Pekin considers TIF and BDD Creation

The use of both Tax Increment Financing and a Business Development District will be essential tools to help address some of the major issues facing the community that include:

  • deteriorating infrastructure;
  • blight and deterioration; and an
  • economic downturn aggravated by COVID-19.  
Illinois municipalities have available to them the use of Tax Increment Financing (TIF) Districts and Business Development Districts (BDD) to address such issues.  Each is described below.  
 
Tax Increment Financing (TIF) Districts
TIF Districts provide a means in which communities can financially assist in the development or redevelopment of a site or area. Cities can utilize the incremental increase in property tax revenues as a result of a redevelopment project to assist with qualifying development projects.  TIF Districts can only be established in municipalities, and as such, municipalities often consider creating TIF Districts to assist with specific redevelopment projects. 
 
Other times, cities will establish a TIF district to catalyze economic activity in a blighted area.  Using the incremental revenues in the TIF, a community can undertake economic development activities or provide incentives that otherwise might not be possible in order to encourage job creation, increase property values, and to protect the local tax base. Eligible project costs in a TIF can include, but is not limited to: 
  • Rehabilitating, reconstructing, remodeling of existing structures; 
  • Costs of construction of public infrastructure improvements; 
  • Architectural, engineering, legal, financial services; and
  • Property assembly costs such as acquisition, demolition, clearing and grading. 
Business Development Districts (BDD) 
A Business Development District is a legally defined contiguous area of a municipality that has certain powers and authorities different from other parts of the municipality. The purposes of the Business District Development is to strengthen the tax base of the Business District area; to assure opportunities for district development or redevelopment; and to attract sound and stable commercial growth in the District.  A BDD is a defined area within which businesses can levy an additional sales tax on eligible goods sold.  Municipalities may elect to impose this additional sales tax in increments of 0.25% up to a maximum of 1.0%.

As with TIF Districts, the BDD is in place for up to 23 years. Funds generated as a result of this sales tax can then be used for certain eligible costs within the district as prescribed by the Business District Act.  Examples of eligible costs (similar to that of TIF) include: 
  • Building construction costs, including reimbursement payments to private developers;
  • Rehabilitating, reconstructing, remodeling of existing structures; 
  • Costs of construction of public infrastructure improvements; 
  • Architectural, engineering, legal, financial services; and
  • Property assembly costs such as acquisition, demolition, clearing and grading. 
One benefit of the BDD over TIF is that it can help assist on new construction where TIF cannot. In combination, both the TIF and BDD can effectively be used to help fund eligible public works projects such as the restoration of Court or Derby Streets; various sidewalk repairs; or storm water management projects. Funds can also go to help new and existing businesses renovate, expand operations or relocate to a more suitable location.  Additionally, there are no restrictions for TIF or BDD funds to help neighborhoods with housing stabilization, demolition of vacant structures or emergency repairs, as long as, the neighborhoods are located within the TIF/BDD District. 
 
LEGAL DESCRIPTION
AREA MAP
Below are links showing the proposed study areas where a new TIF and BDD may be located in the city.
TIF REDEVELOPMENT PLAN
Click on the following link for the TIF District Redevelopment Plan
 
BDD REDEVELOPMENT PLAN
Click on the following link for the Business Development District Redevelopment Plan

Watch the city's website for information relative to the next Public Hearing!

No comments:

Post a Comment

Note: Only a member of this blog may post a comment.