Lincoln Square Business Improvement District


September 7, 2008

Tax Increment Financing (TIF) is a City of Chicago program developed pursuant to legislation of the State of Illinois which provides governmental incentives to private developers to stimulate investment in areas which have difficulty attracting development. It is used in areas which are "blighted" or are in danger of becoming blighted (conservation areas), as defined by the state law which governs TIFs.

The City of Chicago approved a $61,000,000 project budget for the life of the Western Avenue North TIF, with nearly two-thirds of the funds reserved for public works, land assembly and improvement. As of June 2003, no TIF funds have been appropriated. Learn how your business can access TIF funding through programs available to business or property owners within the Western Avenue North TIF district.

In tax increment financing, future property taxes are used to provide incentives to develop areas which would remain undeveloped if not for governmental assistance—for example, areas that are too costly to develop, are underutilized or include vacant property. Tax increment financing gives economic incentives to developers who make improvements in these areas. Tax increment financing does not create new taxes, nor does it automatically increase property taxes. After the improvements take place, assessed property values rise over time and increased property taxes become a source of revenue to pay for the incentive.

The following are programs available to business or property owners located within the Western Avenue North TIF district:

Streamlined Tax Increment Financing for Small and Mid Sized Building Projects
The City of Chicago offers a Streamlined Tax Increment Financing program for small to mid sized building projects that will pay for up to 25% of renovation, expansion or redevelopment costs. Apply through an easy to use application form and efficient approval process. Proposals must demonstrate a need for TIF assistance. Assistance ranges from $25,000 to $1,000,000. Grants are paid in annual installments to participants following the project's completion and do not have to be repaid.

Expenses eligible for TIF grants include:

Land acquisition, clearance and site preparation
Certain environmental remediation measures
Building rehabilitation and repair
Signs or awnings that are permanently affixed to the building
Rehabilitation and remodeling of existing tenant improvements
Streets, streetscaping and other public infrastructure improvements
Professional fees related to the redevelopment project
Up to 30% of an applicant's construction period interest costs
Job training and Welfare-to-Work programs

To be eligible for this type of TIF assistance, the redevelopment project must:

Be located within the Western Avenue North TIF district
Be an industrial, commercial or residential mixed-use property with commercial space on the ground floor. All residential mixed-use projects receiving TIF funds must allocate at least 20% of the residential units as affordable housing.
Create or retain full-time permanent jobs in the City of Chicago
Not be economically or financially feasible or likely undertaken without TIF assistance

Projects involving the conveyance or lease of City-owned land will not be considered for TIF assistance under the streamlined application process. Except in special circumstances, the maximum amount of City assistance that any one project can be awarded under the Streamlined Application is limited to $1,000,000 or 25% of the total project cost, whichever is less. TIF assistance awarded to the project under the Streamlined Program will be disbursed on a pay as you go basis—annually with no front funding, TIF note or TIF bonds issued.

All applicants for TIF assistance must comply with the City of Chicago's construction requirements. During construction, 25% of the hard cost must be paid to City Certified Minority Business Enterprises (MBEs) and 5% must be paid to City Certified Woman Business Enterprises (WBEs). In addition, construction employees must be paid at prevailing wage rates as defined by the Illinois Department of Labor, and Chicago residents must perform at least 50% of total construction worker hours. Applicants seeking assistance for mixed-use residential projects must set aside at least 20% of the housing units for occupancy by low- to moderate-income households. These units must be made affordable to households with incomes no higher than 80% of the Chicago area median income for rental units and 120% of the Chicago area median income for purchase units.

For an application, please contact the Chamber of Commerce.

Small Business Improvement Fund
In response to the growing need to fund smaller improvements to targeted small businesses, the City of Chicago created the Small Business Improvement Fund (SBIF). This fund directs TIF revenues to owners of commercial and industrial properties within specific TIF districts who wish to repair or remodel their facilities for their own businesses or on behalf of their tenants. Program participants can receive matching grants to cover half the cost of remodeling work, with a maximum grant amount of $50,000. The grant does not have to be repaid.

Expenses for a SBIF grant include:

New windows, floors or roof
Sign removal and replacement
Tuck pointing
New heating, ventilation and air conditioning
Improvements to accommodate disabled patrons or workers
Purchase of adjacent property for building expansion or parking

SBIF grants are provided to property owners after remodeling work is completed and all expenses are paid. Residential properties, residential components of mixed-use buildings, and properties leased to fast food chains and certain other businesses are not eligible for the program. Vacant business property is eligible, but grants are not paid until the space is occupied by a business tenant. Property owners that also own the occupying business must meet certain eligibility requirements to participate in the SBIF program.

For an application, please contact the Chamber of Commerce.