By: Brittany Flaherty Theis

A bill signed by Governor J.B. Pritzker seeks to provide more information about the actual performance of Tax Increment Financing (“TIF”) districts. In late July, Governor Pritzker signed House Bill 571, which was written by Rep. Jonathan Carroll, a Democrat from Northbrook, and sponsored by Sen. Ann Gillespie, a Democrat from Arlington Heights. The bill became Public Act 102-0127 (the “Act”).

Each year, a Tax Increment Financing Report must be filed with the Comptroller and made available for examination and copying by the public. Public Act 102-0127, which takes effect immediately, adds new information to the reports that are required to be filed with the Comptroller within 180 days after the end of the municipal fiscal year (or as soon thereafter as the audit for the redevelopment project area becomes available). Different cities have different fiscal years, but one could expect to see some of the new information in TIF reports as early as mid- to late-2022.

Now, the Act requires villages and municipalities to report the number of jobs originally predicted from a TIF district, as well as the number of jobs actually created under the redevelopment plan.

In a TIF district, property tax levels are frozen for a period of up to 23 years. As redevelopment of a blighted area occurs, the increased taxable amount, or “increment,” is used to fund infrastructure improvements or to help defray upfront redevelopment costs. According to the new law, cities and villages must also report on the amount of property tax increment that was projected from the TIF district along with the actual increment created through redevelopment, and the stated rate of return, if any. Under the Act, a municipality in Illinois must have the rate of return independently verified by a third party chosen by the municipality.

School districts and other taxing bodies have been wary of TIF districts for a variety of reasons, the most common being that they won’t receive any of the increased tax revenue for decades. Some municipalities have even sued each other, claiming one used TIF incentives to unfairly entice a large retailer to pack up and move, resulting in a significant loss of sales tax revenue.

The Illinois Municipal Code sections governing these reports contains a schedule of escalating daily fines if a municipality fails to file a report within the required timeframe. The fines range from $5 each day for the first 15 days of delinquency to $20 per day for delays of more than 45 days. For example, if a report is 60 days overdue, the total fine for a municipality will be $750, according to the statute. At that point, the state’s Comptroller’s Office is to hire its own firm to perform the analysis and the respective municipality must reimburse the Comptroller’s Office.

Municipalities also must send the Comptroller a copy of the redevelopment plan each time the redevelopment plan is enacted, amended, or extended. The Comptroller’s Office, under the statute, may publish the reports or portions of reports, on its website.

For decades, attorneys at Whitt Law LLC have guided their clients as TIF districts have been proposed, amended, and implemented. In many circumstances, that has included the development of intergovernmental agreements to address the needs of local school districts impacted by proposed TIF districts. Please contact Whitt Law Senior Attorney Brittany Flaherty Theis with questions regarding the Act or for legal counsel navigating the impact of a TIF district on your taxing district.