A Special meeting of the Carthage City Council was held October 18th, 2005,

at City Hall, 308 Walnut Street. Mayor Nightingale called the meeting to order

at 6:00PM. Answering to roll call were Aldermen Duffy, Neally, Bentzinger, and Walker.


Steven Kline, Vice President of The Economic Development Group, Ltd., addressed the Council, CIDC and interested citizens. His presentation was an informational session on TIF Districts.


TIF districts represent a specialized area of the law with very specific administrative details. The TIF (Tax Increment Financing) Act was established in Illinois in 1977. It started as a way to encourage commercial development like refurbishing deserted shopping centers. Initially with this act, the State reimbursed the 5% sales tax against the cost of refurbishing the properties. This became too expensive for the state to continue, so the act was changed to it’s existing form, which is based on the assessed real estate value of a property.


When considering a TIF district you take two things into consideration

1)     Identify an area where you have aging or absent infrastructure or blighted and dilapidated property

2)     Identify areas where you can generate new business, or increase existing


Aerial maps are often used to delineate these areas of interest.


Once a TIF district is established, the base assessed value of a property is determined. As the vacant land or dilapidated property is developed with TIF assistance, the equalized assessed valuation (EAV) of those properties increases. The new property taxes resulting from the increased assessed valuation above the base value create an incremental increase in tax revenue. This incremental difference is deposited in a special City TIF account and used solely for economic development purposes.  These purposes are specifically outlined in the TIF Act. 


The maximum life of a TIF district is 23 years. To extend this life requires extensive effort including legislative approval.


The plan for a TIF district is critical to its success. In this development plan it is important to designate industrial, commercial or residential plans in detail including estimates of the cost of infrastructure like engineering, land acquisition, water and sewer installation. Generated TIF dollars can be used against these costs.

A TIF is created under the authority of the City Council. The Council will have total authority over the TIF and each project is considered on an individual basis.

Therefore, any property within the TIF has to be within the City limits.


The time line to creating a TIF depends on how extensive the potential area is and how much annexation needs to occur. It usually takes 6 to 8 months.


Mr. Kline described the difference between a TIF and an Enterprise Zone as being tax rebates Vs abatement. An Enterprise Zone allows a property to pay only a certain percentage or none of the tax payment for a specific period of time.

The City would identify certain criteria for the development of an area and if a business meets the criteria they are allowed to build. The example given was the creation of a convenience store Vs an adult bookstore. If they both met the criteria the Council would have no authority to prevent the building of either business. Whereas with a TIF the City Council looks at each individual potential project and has authority to grant or deny said project.


A City could decide to have a TIF or an Enterprise Zone or both, depending on their needs.


Mr. Kline went onto say that the concern most areas have regarding TIF’s is that of school funding. With the incremental tax dollars going toward the TIF, the schools are “shorted” funds that they would otherwise get if development occurred and TIF were not present. The Council is able to utilize TIF funds toward any capital improvement project the school might have. He stated many communities use the funds this way to assist the school with building projects they might not be able to afford. But the funds must be utilized for capital improvement only, not general expenses the school might have.


The school does not have to be within the City limits to utilize the funds in this manner. This is the one exception to the annexation rule above.


If a developer would want to build/refurbish an area identified within the TIF district prior to it being established. A document would need to be developed that identifies the City’s intention to establish a TIF in that region, but the developer would proceed at their own risk.


Establishing a TIF requires extensive reporting and monitoring. The organization Mr. Kline represented could manage the process for the City if it decided to enter into such an agreement. An average fee is $40,000.00 plus $5000.00 for required mailings, publications, public hearings, etc. Based on what he knew of Carthage’s current plan, he felt the cost for Carthage could be less than this.


Should the Council decide to continue, Mr. Kline would present a proposal including costs and fees.


Payment for this service would be in three installments. The first upon signing the agreement. The second upon delivery of the draft of the plan and setting the public hearing dates. The third would be when the final ordinances are presented to the Council. Their fee is a flat base rate with an increase associated with the consumer price index and the success of the development area.


The meeting was adjourned at 7:30 PM.



Katherine Graham

City Clerk