Tax increment financing is a program developed by the City of Waukegan pursuant to legislation of the State of Illinois that provides a governmental incentive to private developers or companies to stimulate new investment and job creation and/or retention. It is used in areas that are "blighted" or in danger of becoming blighted as defined in the state law that governs tax increment financing.
How Tax Increment Financing Works
Tax increment financing works by giving economic incentives to a developer or a company to invest in an area. Property tax revenues are then generated as a result of the new investment and the incremental revenues are used to pay for the incentive. In order for the City of Waukegan to offer tax increment financing assistance to a developer or a company, the city has created various tax increment financing redevelopment areas or districts based on the criteria required by the state statute as discussed below.
The establishment of the tax increment financing districts was a technical process that took approximately nine months to accomplish with the approval of city council. Now that tax increment financing districts are established, the city can pay eligible costs incurred by a developer or a company from the incremental property tax revenue captured in the tax increment financing districts for up to 23 years. The annual increase in incremental property tax revenue generated within the tax increment financing districts over the base amount of property taxes in the year the tax increment financing districts were established can be used for eligible project costs necessary to fully utilize property in the redevelopment area.
Effects on Property Taxes
Tax increment financing does not increase property taxes to a rate higher than what they would be without the establishment of the tax increment financing district. Tax increment is generated only because the developed property is assessed for its more productive use.
When the project is completed, the city expects that the new development will have a positive economic impact on both the immediate area and the city as a whole by stimulating more development in the community, creating new jobs for Waukegan residents, and increasing the city's tax base.