City of Cook hears overview of Tax Increment Financing and tax abatement options

At a special May 27 meeting at the Cook Community Center, Jason Hale of North Shore Development Co. presented Tax Increment Financing (TIF) and Tax Abatement Financing (TAF) to the Cook City Council and city staff.

Hale explained that TIF captures the increase in property taxes created by new development — the “increment” — and that those additional taxes may be used for TIF-eligible costs such as new housing, removal of blight, soil or contamination correction, public infrastructure improvements, and projects intended to increase the local tax base or create jobs. He said three housing-related TIF district types exist: Housing TIF District, Redevelopment TIF District and Economic Development District. The presentation named entities that can establish TIF districts: economic development authorities (EDAs), housing and redevelopment authorities (HRAs), port authorities, cities and rural development finance authorities.

Hale also described Tax Abatement Financing, noting statutory limits and structural differences: “TAF laws are limited to 10 percent of the annual net tax capacity of the political subdivision, or $200,000, whichever is greater,” he said, and typical maximum terms are 15 years (up to 20 years if one taxing jurisdiction declines participation). He said TAF can be used for affordable or market-rate housing, commercial or mixed-use projects, infrastructure, site acquisition and project gap financing and may be faster to approve because it does not require creation of a district.

The presentation emphasized the different revenue mechanics: TIF captures only increases in assessed value (the increment) and often requires coordination among taxing jurisdictions and a statutory “but-for” showing; TAF can be structured to use a portion of existing tax revenue and, in some forms, can be leveraged with municipally issued abatement bonds or pay-as-you-go (PAYGO) notes. The council did not take any action on a specific project during the session and the meeting adjourned at 5:55 PM.

Next steps on any potential TIF or TAF proposal would require a formal application and follow-up analysis, including consultant confirmation and local board or council review if the city chooses to pursue a project.