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 River Edge Redevelopment Zone program provides the following incentives to companies:
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.
Investment Tax Credit
River Edge Zone businesses may claim an extra 0.5% of the cost (“basis”) of qualified depreciable property placed in service in the River Edge Zone as a credit on their state income taxes. This credit is in addition to existing 0.5% investment tax credit allowed all manufacturers in Illinois on state income taxes. Contact the City’s Department of Community Development for State’s definition of “qualified” property.
Sales Tax Exemption
Any building materials used in new construction or rehabilitation of properties located within Rockford’s River Edge Zone and permanently attached to the real estate may be sales tax exempt (8.25%) if a retailer is provided with a Certificate of Eligibility signed by Rockford’s Zone Administrator and a Purchaser’s Statement (both available from the City’s Community Development Department).
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.
Environmental Remediation Tax Credit
Allows for a credit against state income taxes for some non-reimbursed eligible costs for remediation work done on a site in the Zone resulting in a “No Further Remediation Letter” being issued and recorded. This requires a joint review by the Illinois Environmental Protection Agency (IEPA) and the IL DCEO. The property must be in IEPA’s Site Remediation Program to receive the NFR letter. The credit is 0.25 for each dollar spent for non-reimbursed remediation expenses. The credit can be transferred with the property and carried forward for 5 years.
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