The Fairfield/Wayne County Enterprise Zone was designated by Governor Jim Thompson in March, 1990. The Zone covers portions of Fairfield and a corridor along both sides of Highway 45, South to Interstate 64. The purpose of the enterprise zone is to foster economic development in depressed areas. A business location with the boundaries of the Enterprise Zone is eligible for these benefits:
Real Estate Tax Abatement
Any increase in real estate taxes resulting from improvements on industrial and commercial property and made within the Enterprise Zone is abated (100%) for four years. The abatement applies to the increase only. For instance, if a property has an EAV of $10,000 before someone made improvements that brought the EAV to $15,000 - then Real Estate Taxes would be computed for four more years based on the original EAV. The property owner would still pay real estate taxes but would not pay on the value of the improvements until expiration of the four-year abatement period.
Enterprise Zone Maps
Sales Tax Exemptions
Building materials purchased in Illinois (generally) and used on industrial, commercial or residential property within the Enterprise Zone are exempt from the Illinois sales tax. Retailer participation is optional.
200 new jobs and $10 million in investment will trigger additional utility, sales and use tax exemptions. Contact Fairfield-Wayne County Area Development at 618/842-4802 for more information.
Revolving Loan Funds
Both the City of Fairfield and Wayne County have low interest revolving loan funds (RLFs) available for qualifying businesses.
To qualify a borrower must have a good credit history. As a rule a RLF project would be financed with at least one-third of the borrower's cash, one-third from a bank loan, and one-third from the RLF. In some cases a borrower has been able to negotiate with his bank so that the bank's portion of the project financing has been more than one-third of the total. In these cases the borrower's cash must be at least 10% of the total. In any case the city or county's portion of the project cannot be more than one-third.
One full-time job must be created or retained for each loaned RLF increment of $15,000. At least 51% of those jobs must go to low-to-moderate income individuals. Historically the RLF interest rate has been fixed for the term of the loan at 3%. When considering the duration or length of the loan, the city or county will attempt to duplicate what the participating bank offers.
RLF projects create a partnership where everyone wins. The business benefits from a blended lower interest rate, the bank makes a loan with less exposure, and the city/county benefits from the expanded tax base.
Tax Increment Financing (TIF) District
A TIF District - TIF #1 - was created in the City of Fairfield in December 1992. The purpose of the TIF is to foster economic development in depressed areas. To date funds developed through this program have been used to complete over $2.5-million in community and economic development projects.
Fairfield TIF #2 was established in 2005. This TIF District was formed for development of upscale housing. Building lots are currently available.
The State of Illinois allows units of government to identify certain economically distressed areas as a TIF District. The circumstances relating to the operation of a TIF District are strictly regulated. But, the existence of a TIF District allows the creating unit of government to offer unique incentives to new and expanding businesses. Tax Increment Financing (TIF) incentives involve reimbursement for certain project development costs based upon the Real Estate Tax increase or "increment" resulting from new improvements in the TIF District.
In a TIF District the owner of an improved property pays the real estate tax bill, but the "increment" goes into the City of Fairfield's TIF Fund. Then the money in that fund can be used to pay for allowable expenses including infrastructure in support of economic development or reimbursement of developer expenses.
In the instance of a qualifying project and based upon job creation and other benefits to the community, "incremental" dollars paid by the developer can be reimbursed to cover allowable expenses. In these cases a Redevelopment Agreement is negotiated between the developer and the City of Fairfield. The Agreement should be negotiated and approved before work in the qualifying project begins. The standard reimbursement period for a Redevelopment Agreement is four years.
The State of Illinois Tax Increment Allocation Redevelopment Act allows for local Tax Increment Financing (TIF) Districts to cover certain "Redevelopment Project Costs" with the money accumulated in the Special Tax Allocation Fund. Interest cost incurred by a redeveloper related to the construction, renovation or rehabilitation of a redevelopment project is specifically listed as being allowable. Any reimbursement under this part of The Act must be a part of a Redevelopment Agreement that is formally approved by the City Council.
The statute limits the amount of a redeveloper reimbursement to 30% of the redeveloper's annual interest costs. However, if during a given year the interest costs are not sufficient to cover a redeveloper's allowable tax increment costs then the amounts can accrue and be payable when sufficient funds qualify.
The statute also limits the amount of a redeveloper reimbursement to no more than 30% of the total project costs paid by the redeveloper. And, locally the annual reimbursement has not exceeded the amount of the annual increment paid by the redeveloper.
In this case you would qualify as a "redeveloper". The improvements you plan would be considered "redevelopment" of property located in the City of Fairfield TIF District. Assuming you wish to enter in to a "Development Agreement" with the City, you would be able to "recapture"** an amount of the increase in your real estate taxes (the "increment") resulting from these improvements equal to up to one-third of your interest costs associated with the costs of the improvements. The standard Development Agreement is for a period of four years. But, the City can agree to a longer period as long as it doesn't extend beyond the life of the TIF.
**You would pay the tax bill reflecting the increase, as usual, to the Wayne County Treasurer. Then the Treasurer would send the "increment" to the City of Fairfield, the "increment" would be deposited in the "Special Tax Allocation Fund" and the City would issue you a check from that fund.