Petenwell Park Improvements | Adams County, WI

How Cities Can Use Business District Sales Tax

Gregory Crowe, AICP | with 0 Comments

How Cities Can Use Business District Sales Tax

Illinois municipalities are using business district sales tax as a mechanism to fund infrastructure projects. The City of Edwardsville reported that it has implemented several Tax Incremental Financing (TIF) districts as well as “Special Business Districts.” Unlike TIF districts, business districts allow municipalities to fund improvement projects by capturing sales tax increments rather than property taxes.
Business districts increase sales and hotel tax in 0.25-percent increments, up to 1.0 percent in the district, and municipalities collect these funds to increase development in the area through public improvements for up to 23 years. This new view of economic development is different than what municipalities traditionally perform; however, it is a way to benefit existing businesses with the ongoing creation of stronger synergies. 
In our experience, business districts can help local governments by attracting public and private development and redevelopment, plus they can strengthen tax base and serve as an additional revenue stream. The funds are typically used for projects that include street repair or reconstruction, redevelopment of vacant buildings and improvement of the viability of downtown districts or infrastructure to develop a site for commercial use.
Illinois municipalities must do a number of things to plan for business district development, such as document how the area is blighted, discuss the boundaries of the area, establish goals and objectives and form a budget.
Business and residential improvements are essential for ongoing economic development by attracting businesses and improving the quality of life for residents. For more information on business district development in Illinois, please download our free business district development guide.

Still have questions on how your community can implement a Business District Sales Tax? Contact MSA's Gregory Crowe.

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