TIF Districts

The City of Mt. Vernon currently has five active Tax Increment Financing (TIF) Districts:

Downtown TIF, East Side TIF, West Side TIF, North 44th Street (Frontage Rd) TIF, and the North 42nd Street TIF.

The City utilizes TIF financing to provide incentives through development or redevelopment agreements, evaluated on a project-by-project basis.

What is Tax Increment Financing (TIF)?

Tax Increment Financing (TIF) is an economic development tool that helps local governments improve historic districts, restore underdeveloped or blighted areas, and encourage investment in economically challenged neighborhoods.

TIF funds may be used to make public improvements—such as new roads, sewers, and utilities—or to provide incentives that attract new development and businesses. This tool helps overcome costs that can otherwise prevent redevelopment projects from moving forward.

How Do TIFs Work?

When a TIF district is created, the property value within its boundaries is established as the “base” equalized assessed valuation (EAV). Property taxes on this base amount continue to go to the local taxing bodies (schools, libraries, etc.), all of which are part of the TIF approval process.

As redevelopment occurs, property values increase. The additional tax revenue—known as the increment—is collected into a special fund managed by the City. These funds are reinvested into the district to encourage further development, creating a cycle of reinvestment and growth.

How Long Does a TIF District Last?

Under Illinois law, a TIF district may exist for up to 23 years, with the potential for a 13-year extension if certain conditions are met. After the TIF expires, all properties return to the regular tax rolls, and taxing bodies begin receiving revenues based on the updated property values.

To learn more, visit the Illinois Tax Increment Association. 

How Are TIF District Boundaries Determined?

Before a TIF district can be established, the City must determine that the proposed area qualifies under Illinois law. State statute sets specific requirements that must be met before a district can be approved.

An area does not have to be severely deteriorated to qualify. It may be designated as a “blighted area,” a “conservation area” (meaning it shows signs that it could become blighted), or an industrial park conservation area. The proposed district must generally be at least one acre in size and meet a required number of statutory factors.

These factors may include vacant or underused buildings, aging infrastructure, declining property values, environmental concerns, or a lack of private investment. The City must also demonstrate that redevelopment would not reasonably occur “but for” the use of TIF funds.

If the area meets the legal requirements, a redevelopment plan is prepared outlining the goals, proposed improvements, and estimated costs. State law also requires a public hearing and formal approval by the City Council before the district can be created.

This process helps ensure that TIF districts are established based on documented conditions and long-term community planning needs.

Eligible Projects and Uses of TIF Funds

TIF funds may be used to support projects within the district that promote development or redevelopment, including:

• Redevelopment of vacant or underutilized buildings
• Public infrastructure improvements (streets, water, sewer, utilities)
• Environmental cleanup and site preparation
• Downtown revitalization and historic preservation
• Construction of new public works or facilities
• Job training and workforce development
• Marketing and professional planning services

Additional eligible uses are outlined in the Illinois Tax Increment Allocation Redevelopment Act (the “TIF Act”).

How Can TIF Funds Be Used?

The uses of TIF funds are provided in the Illinois Tax Increment Allocation Redevelopment Act, also known as the TIF Act. The Illinois TIF Act generally authorizes that TIF funds may be used for:

• Acquiring property
• Administration of a TIF redevelopment project
• Rehabilitation or renovation of existing public or private buildings
• Construction of public works or improvements
• Relocation
• Job training
• Financing costs, including interest assistance
• Marketing sites within the TIF District
• Studies, surveys and plans
• Professional services, such as architectural, engineering, legal and financial planning
• Demolition and site preparation

Some restrictions may apply; please review the TIF Act for a full list of TIF-eligible costs.