Process of the TIF Program

City of Carbondale Tax Increment Finance (TIF) Program

When a tax increment financing (TIF) district is established, the equalized assessed value (EAV) on each property within the TIF district is set at a "base" value.

Higher Property Values

For 23 years after the TIF district is established, property tax revenue generated by higher property values within the district is paid to the city's special TIF fund, instead of the other taxing bodies. Those taxing bodies (the county, park district, school districts, etc.) continue to get the tax revenue from the "base EAV" in the district, but not the revenue created by property values above the base.

Incentives

The City of Carbondale currently offers incentives for redevelopment in the TIF district by reimbursing developers for expenses through an annual rebate on property tax. The rebates are reimbursement for eligible project costs, and they are tied directly to the property tax increment created on the site of their new development. In several cases, the City has pledged to developers 75% of the property tax on the new improvements they create. This arrangement continues until the point at which the developer has been paid the agreed upon reimbursement.

Example for a Hypothetical Property in the TIF District

  • 2002 (base year)
    EAV: $45,000
    Tax Paid: $3,825
  • 2006 (following a major redevelopment project)
    EAV: $300,000
    Tax Paid: $25,500

After the project is complete in 2006, a property tax increment of $21,675, the difference between $25,500 and $3,825, goes into the City's special TIF fund.

Redevelopment Agreement

In this case the developer has a Redevelopment Agreement with the City Council stating that the City will pay the developer 75% of the property tax increment each year, up to the point that the City has paid $275,000, which was the developer's cost to buy the land. Assuming that the property's new assessed value and the overall property tax rate stay the same, it will take 17 years for the City to complete payment of the reimbursement.

City Use

The City would use its 25% share of the increment to pay for other improvements in the TIF district. View the TIF Fact Sheet (PDF) for more information.