7th Ward Alderman Hosts TIF and SBIF Informational Meeting

Lee Edwards | As of Wednesday, February 26, 2014

“We really have to start educating people so they can understand what a TIF is, how it can be used, what are the programs that are involved, so I wanted to do this.” - 7th Ward Alderman Natashia Holmes.
“We really have to start educating people so they can understand what a TIF is, how it can be used, what are the programs that are involved, so I wanted to do this.” - 7th Ward Alderman Natashia Holmes.

Seventh Ward Alderman Natashia Holmes hosted an informational meeting about Tax Increment Financing (TIF) and Small Business Improvement Fund (SBIF) at the Bradwell School of Excellence, 7736 S. Burnham Ave, on Wednesday, February 19.

According to the City of Chicago, the purpose of TIF is to encouraging public and private business developments and projects through investments. The definition further states that TIF funds are generated by growth in the Equalized Assessed Valuation (EAV).

To accomplish this, an area is designated as a TIF “district” which means according to the City of Chicago, that all property, public or private, within a district has access to TIF funds which can be used for (re)development and revitalization projects. The money in TIFs is circulating money that a district has access to in order to finance projects. Chicago districts are valid for 23 years after which time the district dissolves and the TIF money allocated to that area is then dispersed throughout districts in the city.

“We really have to start educating people so they can understand what a TIF is, how it can be used, what are the programs that are involved, so I wanted to do this,” said 7th Ward Alderman Natashia Holmes.

The two speakers of the meeting were Terrence Johnson, Financial Analyst for the Department of Housing and Economic Development (DHED) and Derek Walvoord, SBIF Program Director. Both Johnson and Walvoord provided outlines as to the purpose of TIFs and SBIFS and how they benefit the community, how to apply for them, what role Chicagoans’ property taxes plays in their funding, etc.

In order to create a TIF district, community meetings are held along with an independent study to identify the eligibility of an area. That information is gathered and taken to a public hearing before the City Council, the Community Development Commission, and Chicago Plan Commission before being approved. There are currently 165 active TIF districts in Chicago.

Johnson answered several of the audience’s questions about TIFs and cleared up common misconceptions. One of the major misconceptions that Johnson wanted to reassure the audience about TIFs was that “TIF do not increase people’s taxes”. “Most of the projects that are financed through a TIF are self-financing,” he Johnson.

When asked by a meeting attendee about reports of TIF funds being used for districts outside of their geographical area, Johnson explained that TIF funds cannot be allocated from one district(s) and then used for a different district on the other side of the city.

“Once TIF districts are designated, the money stays within that designated area versus going out somewhere else,” said Johnson.

Although TIF funds cannot be used in districts beyond their geographical area, they can be used adjoining districts.

Walvoord stated that while in some instances it is possible for adjoining districts to share TIF funding between one another, it is illegal for a non-adjoining TIF to share and or use another district’s funding. Walvoord recalled that TIF funds from several adjoining districts was used to renovate South Shore High School, 7626 S. Constance Ave.

Johnson told the Chicago Citizen Newspaper that the TIF application process was so detailed-oriented and lengthy that most businesses and organizations hire consulting firms to insure the application is filed out correctly. After the application is completed, the DHED reviews the submission and potentially awards funding. However, the entire process usually takes nine to 12 months to complete.

SBIF, the smallest TIF related program managed by the Chicago Department of Planning, allows owners and tenants of commercial and industrial properties within TIF districts to use TIF revenue as funding for repair or remodeling work to their establishments. SBIFS are the smallest TIF and related program managed by the Chicago Department of Planning & Development (CDPD). SBIFs can be acquired faster than TIFs, too.

Individuals awarded SBIF funding can receive up to $150,000 per project.

“The Small Business Improvement Fund (SBIF) is a city-wide program,” said Walvoord. “It has a strong presence in the 7th Ward and I hope people get interested and apply and open up new small businesses.”

After the meeting, Lona Reiling, owner of Divas & Dogs, located on the south side of Chicago, who attended the meeting stated that she took away several things from the meeting that was very informational. Chief among what she learned was “[TIF] [do not] affect your own home [property] taxes” among other things.

For more information about TIFs visit http://www.cityofchicago.org/city/en/depts/dcd/provdrs/tif.html

For more information about SBIFs visit www.somercor.com/sbif.

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