Today, we are going to have a quick discussion of one of Illinois municipalities’ favorite tool for growth: Tax Incremental Financing Districts (TIFs).

TIFs, in theory, seem relatively harmless. Usually, a town, municipality, “redevelopment commission” or other governmental entity creates a TIF by drawing geographic lines around a particular area and demarcates that area as the TIF. If passed, the TIF freezes property taxes going to the government at whatever rate it is at the time of the TIF approval. If property taxes increase, any increased revenue above that frozen tax rate goes to a developer or redevelopment commission designated by the TIF. The thought behind TIFs is that they will spur redevelopment of an area hurting for growth or suffering from blight. Illinois, in particular, has had sort of a love affair with TIFs. (Chicago collected over $500 million in TIF money in 2008)

In reality, if a TIF is being utilized, the chances eminent domain will follow suit eventually are high.

Part of an area’s designation as a TIF usually requires some showing of “blight.” “Blight” can be proved by a number of factors–including exterior or interior building obsolescence, lower income–and once an area is designated “blighted” for purposes of a TIF, a pandora’s box of options avail the redevelopment commission or developer.

First, “blight” is one of the quickest and easiest methods for a condemning authority to exercise eminent domain and immediately transfer ownership and control of the land acquired to another private entity. Normally a condemning authority cannot simply acquire private land and transfer it to another private individual, but if blight has been shown, it then becomes the landowner’s responsibility to rebut that blight assessment. In other words, if a TIF has been established, it does not matter that the developer who receives the excess property tax revenue is private because for all intents and purposes, that private developer will have the right to condemn via the local municipality or redevelopment commission.

Second, even if a private developer is not directly involved, a TIF is a surefire sign that eminent domain is on the way. Why? Because these excess funds designated for “redevelopment” are usually used to eventually buy properties placed in the TIF. For example, a neighborhood block may be placed in a TIF, and eventually, enough funds have accumulated in the TIF fund that redevelopment seems possible. Part of these accumulated funds may be used to buy property for a parking lot or park. A good chunk of TIF funds raised are ironically utilized to purchase the very properties were placed in the TIF.

Moving forward, if you are a landowner whose land has been placed in a TIF and/or may be dealing with a “redevelopment commission” or other “redevelopment” entity, be cautious that your land may eventually be acquired via eminent domain.

If you think you may be affected by a TIF or Revelopment Project or are interested in a free consultation, contact our eminent domain landowner attorneys at 1-888-318-3761 or visit us on the web at www.landownerattorneys.com.