Economic Development Blog

As municipalities scramble to find ways of financing the development or redevelopment of retail and commercial corridors, the State of Illinois designed the Business District Development and Redevelopment Sales Tax back in 2005. (Legal citation is 65 ILCS 5/22-74.3-5). The municipality may impose this tax if it has plans to develop or redevelop an area that may directly benefit from the proposed plan. Examples may be shopping corridors that have been abandoned by major retailers, an older industrial park or a blighted area. The BDD, as it is known, is easier to implement than a Tax Increment Finance District and still generates a substantial amount of revenue. An added advantage: a BDD does not require voter approval. The BDD tax rate may be imposed in 0.25% increments and cannot exceed 1%.

For the commercial developer, a BDD can be an attractive incentive, particularly for redevelopment financing. The major disadvantage is that the sales tax is higher within the district than surrounding areas.

To find out more about BDDs, here are some links to the Illinois Department of Revenue and other websites:

http://www.revenue.state.il.us/LocalGovernment/Overview/HowDisbursed/1002-20.pdf
Statutes: www.ilga.gov/legislation/ilcs
Public Acts: www.ilga.gov/legislation/publicacts
Illinois Department of Commerce and Economic Opportunity (DCEO):
www.illinoisbiz.biz

Chris Manheim