Tax Increment Financing (TIF) Districts
TIF financing allows a developer or property owner to receive a portion of the increased real estate taxes generated from a rehabilitation or new construction project. Funds can be provided through two methods:
Pay as you go method
A fixed annual dollar amount can be paid directly to the developer based on the amount of the yearly real estate tax increase generated by the project.
Through a bonding process, the City can provide funds during construction. The City borrows money by selling bonds, which are repaid by the increased real estate taxes generated by the development process
What makes a project a good candidate for TIF assistance?
- Substantial increase in real estate taxes after construction
- New construction or substantial rehabilitation
- Adding building square footage
- Low present real estate value
- Vacant buildings or land
River Edge Redevelopment Zone (RERDZ)
The State of Illinois created the River Edge Redevelopment Zone to create and retain jobs and stimulate business and industrial retention and growth through the use of tax incentives and grants. The Zone was approved August 27, 200,7 and will be in effect for 30 years through the year 2037. The River Edge Redevelopment Zone program provides the following incentives to companies:
Building Material Sales Tax Exemption
Any building materials used in new construction or rehabilitation for non-residential projects located within Rockford’s River Edge Redevelopment Zone and permanently a ached to the real estate may be sales tax exempt (8.25%) if a retailer is provided with a Certificate of Eligibility issued by the Illinois Department of Revenue. Purchasers whether contractor or owner must apply for the Certificate of Eligibility from the City of Rockford River Edge Redevelopment Zone Administrator.
Individuals, corporations, partnerships, trusts or estates receiving dividends declared by corporations which are located exclusively in Illinois River Edge Zone and which conduct essentially all of their business in the River Edge Redevelopment Zone may deduct such dividends on state income tax.
Interest Income Deduction
Allows financial corporations to deduct an amount equal to the interest received for a loan for development in an RERZ from their corporate State Income tax. The loan must be secured by property located within an RERZ.
State Historic Tax Credit
Historic Tax Credits (HTC) based on the age of structure – Tax credits are sold to investors as a source of funds for the project. A big benefit of these tax credit programs is that permanently affixed furniture, fixtures, and equipment are also eligible for the tax credits, further reducing the upfront capital costs for your company.
The River Edge Historic Preservation Credit (25%) has been extended to tax years ending prior to January 1, 2022. Tax years ending on December 31, 2017, will be the final year the five-year credit carryforward can be earned. Any River Edge Historic Preservation credit claimed on a return filed for a taxable year ending on or after December 31, 2018, cannot be carried forward.
Property Tax Abatement
The City portion of property taxes on a parcel may be abated for a period of three years unless the property is in a TIF district or an area designated as a Redevelopment Area under the Industrial Jobs Recovery Law. The amount of the abatement cannot exceed the amount attributable to the construction of improvements or the rehabilitation of existing improvements on the parcel.
City of Rockford
The City of Rockford offers tax exemptions on many aspects of business. Exemptions through the Enterprise zone include
- Investment Tax Credit
- Building Material Sales Tax Exemption
- Utility Tax Exemption
- Machinery and Equipment Sales Tax Exemption
- High Impact Service Facility Machinery and Equipment Sales Tax Exemption
- City of Rockford Tax Abatement