Tax Increment Finance Policy

I. Purpose of the TIF Policy

The Village of Brookfield finds that sound management principles require that TIF resources be used prudently and that it support a stable economic base for the Village.  To assist in maintaining this stable financial base and to foster a competitive business environment, the Village desires to establish a policy that guides the investment of public funds in the Ogden TIF District and any future TIF Districts.  Invested public funds are to facilitate redevelopment projects expected to benefit the Village and that would not otherwise occur, “but for” for the investments.

As a policy document, the TIF policy will (a) provide a general framework for the Village Board and President to evaluate proposed uses of tax increment financing and (b) deliver guidance to staff in forming recommendations regarding the use of tax increment financing and negotiating any redevelopment agreements with developers.

II. Goals and Objectives

The overall goal of the TIF Policy is to promote a stable economic base that enables the Village to continue to deliver critical services to the community.  Further, the TIF Policy supports the overall vision articulated in the 2020 Master Plan, which is the foundation for Village land use and planning.  This TIF Policy affirms the 2020 Master Plan goal of “a balanced pattern of development in the community that provides for well designed, compatible, and economically sustainable business, employment, and residential areas.”

To further the aforementioned goals, the Village will use tax increment financing to achieve certain redevelopment objectives:

  • Increase and diversify the Village’s property tax and sales tax base;
  • Promote aesthetic improvements and prevent the onset of blight; and
  • Invest in redevelopment projects that, but for TIF assistance, would not otherwise occur.

III.  General Guidelines for Redevelopment Projects

A. The Village will comply with the requirements of the Illinois Tax Increment Allocation Redevelopment Act (the “TIF Act”), as amended. Among other provisions, the TIF Act limits expenditures for certain types of “redevelopment project costs” as defined in the TIF Act.

B. Pursuant to Section IV of this policy, the Village will undertake an economic evaluation/risk assessment of proposed redevelopment projects, to ensure that (a) Village assets are safeguarded and (b) the proposed projects satisfy the “but-for” test embodied within the Tax Increment Allocation Redevelopment Act.

C. Alternatives, such as “pay-as-you-go” financing and payment of public infrastructure costs with tax increment revenues, are preferable to bond financing. The Village will generally not issue general obligation tax increment bonds except when (a) all net bond proceeds are used to directly pay public costs or refinance debt that was previously issued to pay for such costs, (b) the taxable development that will generate the tax increment used to pay all or a portion of the debt service on the bonds is fully constructed and assessed by the Cook County Assessor, and (c) the development has met the terms and conditions of a redevelopment agreement with the Village.

IV. Economic Evaluation and Risk Assessment

A. Proposed uses of tax increment financing will be subject to rigorous economic analysis and risk assessment. Specific evaluation activities may be established by staff to perform the evaluation and assessment. Based on the recommendation of the Village manager or his/her designee, additional reviews may be undertaken for larger projects involving greater public financial assistance.

B. The results of the economic analysis and risk assessment will be presented to the Village Board prior to the request for approval of the proposed use of tax increment financing.

C. The need for public assistance must be demonstrated and documented by the developer to the satisfaction of the Village, pursuant to staff procedures. Staff will identify supporting documentation needed (e.g., application for public financial assistance, “proformas” containing project budgets and cash flow projections, market studies in connection with anticipated land uses, and other financial/market information). The Village will perform an independent analysis of the supporting documentation, including project costs, to ensure that the request for assistance is credible.

D. The developer must be able to demonstrate the ability to execute the proposed redevelopment project, taking into account financial capacity, past experience, general reputation and credit history.

E. When the project is intended as a for-sale development (i.e., office, retail or residential condominiums), the developer must retain ownership of the overall project until final completion; provided, however, that individual condominium units may be sold as they are completed. For all other projects, the developer itstabilize its occupancy, to establish the project management, and to initiate payment of taxes based on the increase in equalizes assessed value.

F. Performance Measures

The Village may consider the following performance measures to evaluate a redevelopment project:

  • Projected Revenues – The Village will estimate property tax and, if applicable, sales tax revenue of a project over the period that the TIF District is in effect;
  • Leverage Ratio – The Village will endeavor to maximize the amount of private investment per dollar of public assistance;
  • Financial Gap – The Village may perform a “gap analysis” to determine the difference or gap between project sources and uses; additionally it may compare developer investment return with and without public assistance to determine an appropriate rate of return to the developer (e.g., based upon calculations such as internal rate of return);
  • Developer Equity – The Village will consider the percentage of project costs financed by developer equity, to determine if Village and developer interests are properly aligned.  Equity includes cash, unleveraged value in land, or prepaid costs allocated toward the project.

V. Prohibited Uses

The Village will not provide assistance for a redevelopment project that:

  • Would otherwise result in reimbursement for redevelopment projects costs prohibited by the TIF Act;
  • Exceeds 100% of the incremental revenue associated with the project parcels, unless it furthers a Village goal in addition to the redevelopment objectives identified in Section II of this policy;
  • Does not conform to the Ogden TIF Plan or land use policies as amended from time to time, including the zoning ordinance, 2020 Master Plan, or other land use ordinances of the Village.

It is further understood that any and all development projects that occur within the Village’s Tax Increment Finance District are subject to all Village ordinances, codes or Regulations that are currently in effect or that may be amended or modified by the Village.

VI. Administrative Responsibilities

The Village Manager, Assistant Village Manager, or designee shall be responsible for implementing the TIF Policy, including the development of any procedural manual, guidelines, or applications.