Background & Overview
Currently the City of East St. Louis has 3 TIF districts. In January 1977, Tax Increment Financing was made possible by the Illinois General Assembly through passage of the Tax Increment Allocation Redevelopment Act.
The Act provides a means for municipalities, after the approval of a redevelopment plan and project, to redevelop blighted, conservation, or industrial park conservation areas and to finance redevelopment project costs (sometimes referred to as Project Costs or Redevelopment Project Costs) with incremental property tax revenues. "Incremental Property Tax" or "Incremental Property Taxes" are derived from the increase in the current equalized assessed evaluation (EAV) of real property within the Project Area over and above the "Certified Initial EAV" of the real property. Any increase in EAV is then multiplied by the current tax rate which results in Incremental Property Taxes. A decline in current EAV does not result in a negative Incremental Property Tax.
To finance project costs, a municipality may issue obligations secured by estimated Incremental Property Taxes to be generated within the Project Area. In addition, a municipality may pledge towards payment of such obligations any part or any combination of the following:
- Net revenues of all or part of any redevelopment project
- Taxes levied and collected on any or all property in the municipality
- The full faith and credit of the municipality
- A mortgage on part or all of the redevelopment project
- Any other taxes or anticipated receipts that the municipality may lawfully pledge
Tax increment financing does not generate tax revenues by increasing tax rates. This financing mechanism allows the municipality to capture, for a certain number of years, the new tax revenues produced by the enhanced valuation of properties resulting from the municipality's redevelopment program, improvements and activities, various redevelopment projects, and the assessment and reassessment of properties. All taxing districts continue to receive property taxes levied on the initial valuation of properties within the redevelopment project area.
Additionally, taxing district can receive distributions of excess Incremental Property Taxes when annual Incremental Property taxes received exceed principal and interest obligations for that year and redevelopment project costs necessary to implement the redevelopment plan have been paid and such excess amounts are not otherwise pledged, earmarked or designated for future usage on other redevelopment projects. Taxing districts also benefit from the increased property tax base after redevelopment project costs and obligations are paid and the Project Area's term has expired or has been terminated.