TIF 101

“TIF” means “Tax Increment Financing”. A “TIF” is a tool to raise money to pay for civic improvements by “redeveloping” underutilized, underdeveloped property. The TIF area is defined by the city. The TIF increases the property value by changing the type of structures and ownership of the structures that are built on the land – or, in legal terms, changing the “use of the land”.

Currently the municipal parking lots and former Public Works building pay no taxes. If structures are built upon those vacant parcels they will become new tax payers. Their entire taxes, called an increment, will go into the TIF “pot”. Funds from this “pot” can only go for improvements within that TIF area.

Those newly realized real estate taxes will pay for bonds to be issued to pay for both the underground parking and the performing arts center. When the bonds for the underground parking and performance center have been paid off, the TIF District will “expire” as it ceases to exist and the enhanced taxes based on the improved land values will revert back to the normal taxing bodies as will any remaining funds in the “pot” that are unexpended for district improvements. Current taxpayers will not have to pay for the underground garage nor the performing arts center.

The future value of the property is dependent upon what the City of Naperville decides to build on the property. Private uses, instead of public uses, generate property taxes. The increase in property taxes is directly proportional to the type of structures and the density of the structures.

If a homeowner in the TIF district currently pays $7,500 in real estate taxes, that $7,500 continues to be paid to the various taxing bodies for the entire term of the TIF. That $7,500 every year will always go to the normal taxing bodies. If the next year your taxes are $8,000, then $500 goes into the TIF pot. The next year if your taxes are $9,000, then $1,500 goes into the TIF pot, etc. These tax increases would not be because of the OMNIA project.  Rather, they would be the normal increases based on your home’s assessed value. A homeowner pays the same real estate taxes whether within a TIF or not.

Cantera was funded by a TIF approved by the City of Warrenville. One of the taxing districts that overlapped it was Naperville’s School District 203. School District 203 is now receiving additional funding from this successful TIF because of the enhanced tax base created at Cantera.