City of Jacksonville TIF District
Downtown Improvement Program Guidelines
Downtown Tax Increment Redevelopment Program
The City of Jacksonville offers several forms of business assistance and incentives through the use of Tax Increment Financing (TIF) revenue. TIF is applicable to a specific geographic region, and a property must be within the borders of the TIF district to be eligible for funding assistance (see attached Map). Also, the expenditure of TIF revenues is limited to certain specific types of “redevelopment project costs”, as defined in state statute and the City of Jacksonville Downtown Tax Increment Redevelopment Plan and Project. Application or assistance can be obtained at City Hall, 200 West Douglas, Jacksonville, Illinois, 62650, or by calling 217-479-4620.
Eligible Project Costs
The TIF program was created by state statute (65ILCS 5/11-74.4 et seq.) As such, the City of Jacksonville is bound by limitations and provisions contained in the statute. TIF funds are only to be used for “redevelopment project costs” (RPC’s) as defined by the statute. RPC’s mean and include all reasonable or necessary costs incurred or estimated to be incurred incidental to a redevelopment plan and a redevelopment project. Examples of such costs are:
- Costs of studies, surveys, professional fees for architectural, engineering, legal or financial services rendered incidental to the redevelopment plan.
- Property assembly costs, including but not limited to acquisition of land and other property, real or personal, demolition of buildings, and the clearing and grading of land.
- Cost of rehabilitation, reconstruction, or repair or remodeling of existing public or private buildings and fixtures.
- Cost of construction of public works improvements.
- Cost of job training and retraining projects.
- All or portion of a taxing district’s capital costs resulting from the redevelopment project incurred or to be incurred in furtherance of the objectives of the redevelopment plan and project, to the extent the City, by written agreement, accepts and approves such costs.
- Interest costs incurred by a redeveloper related to the construction, renovation or rehabilitation of a redevelopment project provided that such subsidy does not exceed 30% of the annual interest cost incurred by the TIF project redeveloper.
TIF funds are specifically excluded in the costs of construction of new, privately owned buildings, as they are not an eligible RPC. It is further not the intent of the TIF to be used for inventory or general operating costs of a business.
Total Project Costs may include both TIF eligible and non-TIF eligible redevelopment projects costs.
Types of Assistance
The City of Jacksonville offers TIF grants for certain projects as defined herein. These grants are generally paid on a reimbursement basis or directly to a vendor or contractor for products or services already delivered. As such, grants are generally not given to a redeveloper in advance, but on a reimbursable basis. The funds are not subject to repayment in most instances, unless it is otherwise provided for in the redevelopment agreement negotiated between the developer and the City. Recipient of grant funds are required to enter into a redevelopment/grant agreement with the City of Jacksonville, which provides for terms and covenants.
The City may provide assistance in the form of an initial architectural or structural analysis of a proposed redevelopment project for the purpose of determining general or structural feasibility and for developing a preliminary scope of work.
In some instances, the City may issue a grant in the form of a Promissory Note issued by the City to provide up to 100% of eligible redevelopment project costs payable solely through incremental property tax revenue generated from the redevelopment project, which grant would be paid to the developer through annual reimbursement payments, following the annual distribution of property tax from the County Treasurer’s Office. As a general rule, Notes issued by the City shall be for a term of ten years, beginning with the year the first incremental revenue from the improvement project is received.
A grant through a Note may be particularly appropriate if no general TIF revenues are available from the Special Tax Allocation Fund for the Downtown TIF Project.
Low-interest TIF loans are also available for eligible projects. The interest rate charged on these loans is typically 3%, although the rate may vary with market rate or with the individual project or applicant. The City Council may, in extraordinary circumstances, waive all or portion of the loan interest based on the individual project and its impact on achieving the objectives of the redevelopment plan. The term of the loan shall not be longer than ten years, although the loan principal may be amortized based on a longer term, with a balloon payment due at the end of the loan. The City may loan the maximum of 80% of the eligible project costs to a redeveloper, but as a general rule, the City’s loan shall not be in excess of 50% of the total project costs. All TIF loans are required to be collateralized through one or a combination of a mortgage on the subject real estate, a personal guarantee, or the pledging of some other real or personal property acceptable to the City. Recipients of the loan funds are required to execute redevelopment agreement and a promissory note to the City of Jacksonville.
The City of Jacksonville may use TIF funds to defray a portion of the interest expense on commercial financing for eligible projects. These subsidies are limited to 30% of the annual expense for a period of not to exceed ten years. Subsidies are paid only after certification by the commercial lender of the actual interest paid by the developer.
Project Catagories and Guidelines
New Business Construction
The City of Jacksonville may enter negotiations with a developer constructing a new business. As mentioned above, the costs of construction of new, privately owned buildings are not eligible for TIF assistance. However, certain other elements of the project may be eligible for funding, including grants, loans and interest subsidies. The City will consider each project individually, and may enter into a redevelopment agreement at the City’s option. Types and amounts of assistance granted, if any, will vary from project to project.
These projects will include interior remodeling, parking lot reconstruction, exterior upgrades, architectural signage, and purchase of personal property such equipment, furniture, and fixtures to be used by the business, and other physical improvements to a business.
Interest subsidy may be approved by the City for up to 30% of the annual interest cost for commercial financing of eligible RPC’s.
Facade Restoration Grants and Loans
This category applies to buildings within the Downtown TIF Redevelopment District, and the City Council will give relative priority to façade restoration plans that involve more than one business in a block, with full block of buildings in a plan being given the greatest priority. The plan for any façade restoration will be subject to Council approval, and property owners are encouraged to maintain the original historic character of the subject buildings in their restoration plans. Developers may receive:
- A grant for up to 75% of the eligible RPC’s, or an amount not to exceed $20,000
- A low-interest loan for balance of eligible RPC’s, providing total project does not exceed $40,000.
A Promissory Note may be issued by the City for up to 100% of façade restoration, not to exceed $30,000, to be in the form of annual reimbursement payments to the developer, payable strictly from the incremental property tax generated from the redevelopment project, which Note would generally be issued for a period not to exceed ten years from the first year of incremental tax revenue is received from the project. The Note term may be extended if it is determined that the estimated time frame for collecting an amount equal to the grant amount approved for the cost of facade improvements will require a term of more than ten years.
Emergency Structural Repairs
These projects involve buildings within the downtown district that are experiencing a structural defect that could potentially result in the destruction of the building. These defects must be verified by a structural engineer or architect, and the repairs must be designed by a structural engineer or architect.
Examples would include a collapsing roof or exterior wall, a severely settling foundation, or crumbling/falling exterior masonry. A developer may receive:
- Grant for up to 75% of the eligible RPC’s, not to exceed $20,000
- Low-interest loan for up to 25% of the eligible RPC’s, providing total project does not exceed $40,000.
Interest on the loan will be waived for the 1st and 2nd years of the loan.
ADA, Life Safety/Building Code, and Electrical Rehabilitation
This category includes repairs and remodeling to bring an existing building/business into code compliance for electrical systems, accessibility, or life safety issues. Examples would include a new electrical service, the installation of ADA compliant restrooms and entrances, elevators, or the installation of new exterior doors if done to provide an approved additional means of egress, Redevelopers may receive:
- Grant for up to 75% of eligible RPC’s, not to exceed $20,000
- A low-interest loan for balance of eligible RPC’s, providing total project does not exceed $40,000.
Taxing District Capital Costs
The City Council may, from time to time, approve funding eligible costs as outlined hereinbefore to Taxing Districts who levy taxes within the Downtown TIF District in accordance with the Downtown TIF Redevelopment Plan and Project.
Applications for TIF Assistance are first considered at the staff level. City staff will review the application to ensure that it is complete, and that it adheres to these guidelines for TIF assistance. [The City Council shall appoint a TIF Review Committee who will next review the application, and forward a recommendation for approval or disapproval to the full City Council. The Council may wish to utilize the existing Loan Review Committee established for review of RLF Loan Applications, which consists of the Mayor, Treasurer, Superintendent of Inspection, and Economic Development Director. The City Council will make all final determination regarding application approvals. The following criteria will be used to evaluate each TIF assistance application.
Return on Investment
The City will calculate and consider any additional amounts of local sales tax or property tax anticipated to be generated by the project, along with interest earned on a low-interest loan, as the City’s return on investment. Inasmuch as there is a clear history of decline in both tax revenues and property conditions in the downtown area, the value of restoring the tax base and addressing a blighting influence of deteriorating property conditions, shall also serve as a legitimate form of return on investment. The City’s benchmark or desired goal for return on investment for projects shall be ten years.
The potential for a redevelopment project to create new jobs and retain existing jobs within the community is viewed as a priority, and applications will be judged, at least in part, on that basis.
The City will, as a general rule, fund 50% to 80% of the RPC’s in the downtown district, except as otherwise, provided for in these guidelines. The applicant through cash investment, equity position, and/or commercial financing must supply the balance of funding. The City Council may also consider the value of “sweat equity” invested into the project by the applicant when reviewing applications.
Is TIF needed? TIF funds should only be used to “trigger” projects that would not otherwise occur given the prevailing market conditions and the applicant’s reasonable expectation of their return on investments. Has the applicant provided convincing information that the use of TIF is essential for the project, i.e. “but for” argument?
TIF revenues and expenditures are programmed on an annual basis according to the annual budget. Funding may be limited or denied based on these constraints. The City has also adopted the following maximum limits on assistance: Interest subsidies — 30% of the total project cost; Grants as part of an ADA Life Safety, or Electrical Installation, or combination thereof – $20,000; Low-interest loans – $50,000, unless otherwise provided in these guidelines. These limits are desired criteria that, in the absence of compelling reasons justifying the same. If the City is going to exceed these projects limits, this fact will be pointed out to the Council and the special factors will be fully outlined justifying the same.
The applicant must provide documentation of the financing for the project, as well as individual or corporate financial information, as requested by the City. The City reserves the right to obtain outside evaluation of relevant financial information to evaluate the financial soundness of a project or applicant.
Is the project harmonious with the surrounding properties and uses, and is allowable under current zoning codes?
Diversity of Services
TIF funds should be used to diversify and supplement the existing business mix within the downtown area to the extent possible. TIF funds should also be used as a tool of the City Council to achieve goals of the Comprehensive Land Use Plan of the City and any other current or subsequent visioning plans approved by the City Council. Does the applicant’s business offer goods and services deemed desirable and appropriate within the downtown district.
Is sufficient collateral and/or personal backing available to reasonably ensure that the City will at least recover its principal in the event of a default? Will the property be protected by sufficient commercial property insurance to protect the City’s principal?
Category: Tax Incentives
More Tax Incentives
Established in 1990 to encompass downtown Jacksonville and the City’s northeast section, the Enterprise Zone was expanded in 2002 to include the industrial area along the Illinois River south of Meredosia. The Jacksonville/Morgan County Enterprise Zone provides property tax abatement on a seven-year sliding scale, exempts sales tax on building materials and offers several income tax incentives.Learn More
Created in 2000, the TIF District is a geographic area along U.S. Route 267 and bordered by Interstate 72 within the Village’s limits. The TIF District utilizes new incremental property tax revenue to help pay for infrastructure necessary in hopes of stimulating additional private-sector investment.Learn More