What is the “but for” test?

When considering an area for TIF designation, municipal officials must ask the question “Will the same kind of private investment occur here without an incentive?’

In order to designate that area as a TIF district, the answer to this question must be “No.” But for the incentive provided by Tax Increment Financing, development would not occur in the designated area.” Evidence that the district satisfies the “but for” test is provided in the Redevelopment Plan.

According to a national study of TIF laws undertaken by Chapman and Cutler, a large bond counsel firm, Illinois has the most stringent “but for” test of the 47 states that use Tax Increment Financing.

 

 

 

 

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