Economic Development Incentives
As the City of Chicago’s lead economic development agency, the Department of Planning and Development (DPD) administers numerous business assistance and financial incentive programs on behalf of local companies.
The programs and incentives are offered to commercial, retail, industrial, and non-profit organizations that are retaining and adding jobs for community residents. Assistance includes grants, tax reductions, loans, land-write downs, fee waivers and other forms of business aid. Program participation is subject to an application process to determine eligibility. Businesses are encouraged to review terms and conditions with program representatives prior to filing an application.
Class 6(b) Property Tax Incentive
The Class 6(b) program offers a 12-year reduction in real estate assessments from the standard Cook County industrial rate of 25 percent. Qualifying properties are assessed at 10 percent for the first 10 years, 15 percent for the 11th year and 20 percent for the 12th year.
Properties must be used for industrial purposes and involve:
- New construction
- Substantial rehabilitation
- Re-occupancy of abandoned industrial property
Qualifying applicants may also apply to renew their tax reduction for an additional 12 years.
Class 7(a) and 7(b) Tax Incentive
The Class 7(a) and 7(b) programs offer real estate tax incentives for commercial projects in specific areas. Qualifying properties can receive a 12-year reduction in real estate assessments from the standard Cook County commercial rate of 25 percent. Qualifying properties are assessed at 10 percent for the first 10 years, 15 percent for the 11th year and 20 percent for the 12th year.
The area must be a Redevelopment Area, Empowerment or Federal Enterprise Zone.
- 7(a): Project costs less than $2 million
- 7(b): Project costs more than $2 million
Maps of eligible areas are available on the DPD web site at www.cityofchicago.org/dpd.
Class 7(c) Tax Incentive
The Class 7(c) Commercial Urban Eligibility (CURE) program offers real estate tax incentives for commercial properties regardless of where they are located. Qualifying properties can receive a five-year reduction in real estate assessments from the standard Cook County commercial rate of 25 percent with no minimum investment required. Qualified properties are assessed at 10 percent for the first three years, 15 percent for the fourth year and 20 percent for the fifth year.
Properties must involve:
- New construction
- Substantial rehabilitation
- Re-occupancy of abandoned commercial property
Class 8 Property Tax Incentive
The Class 8 program offers reduced Cook County property tax rates on commercial and industrial projects in areas experiencing severe economic depression. Qualifying properties can receive a 12-year reduction in real estate assessments from the standard Cook County rate of 25 percent. Reduced rates are the same as the 6(b).
Class C Property Tax Incentive
The Class C program offers reduced Cook County property tax rates on commercial and industrial properties that have substantial environmental contamination. Rates are the same as the 6(b). Remediation costs must exceed $100,000 or 25 percent of the property market value in the prior year.
Class L Property Tax Incentive
The Class L program encourages rehabilitation of commercial, industrial, and multifamily properties that have been designated as official City landmarks or contributing buildings in designated landmark districts. Qualifying properties are assessed at 10 percent for the first 10 years, 15 percent for the 11th year and 20 percent for the 12th year.
Work must meet or exceed the U.S. Department of the Interior’s standards and be used for either:
- Multifamily residential
- Not-for-profit purposes
Enterprise Zone Program
Businesses located within Chicago’s six enterprise zones are eligible for State of Illinois tax incentives, exemptions, and other benefits that stimulate economic activity. Existing Enterprise Zone businesses and businesses relocating to an Enterprise Zone can lower operating expenses and increase profits by taking advantage of the many tax incentives offered through the program. Incentives include:
- Combined Sales Tax Exemption (State, Cook County, City) of 9.25 percent for building materials.
- Machinery and Equipment Consumables/Pollution Control Facilities Sales Tax Exemption: 6.25 percent for property to be used for manufacturing or in the operation of a pollution control facility.
- Utility Tax Exemption: A state exemption on gas, electricity and the Illinois Commerce Commission’s administrative charge/telecommunication excise tax.
- Investment Tax Credit: A state investment tax credit of 0.5 percent is allowed for machinery, equipment and buildings.
- Dividend Income Deduction: Zero tax on dividend income from corporations doing substantially all their business in an Enterprise Zone.
- Jobs Tax Credit: Allows a business a $500 credit on Illinois income taxes for each job created in the Zone for which a certified eligible worker is hired.
- Interest Deduction: Financial institutions are not taxed on the interest received on loans for development within an Enterprise Zone.
- Contribution Deduction: Double the value of a cash or in-kind contribution to an approved project of a designated Zone organization from taxable income.
Contact: 312.744.4389 Additional information is available here.
Industrial Development Revenue Bonds
The City of Chicago issues tax-exempt Industrial Development Revenue Bonds (IDBs) and lends their proceeds to manufacturing companies to finance qualified development projects. IDB proceeds may also be used for either new construction or renovation. Tax-exempt bond financing offers long-term financing at rates lower than conventional financing.
Bond proceeds are limited to:
- Facilities that are primarily used to manufacture or process tangible products
- The acquisition of fixed assets such as land, buildings and equipment
Historic and architecturally significant buildings designated as official landmarks by the Chicago City Council are eligible for a variety of incentives that reduce operating costs. The incentives include permit fee waivers and eligibility for property tax reductions and federal rehabilitation tax credits.
Local Industrial Retention Initiative (LIRI)
The LIRI program provides funding to not-for-profit organizations that provide economic development services to companies located in and around designated industrial corridors. LIRIs work toward job retention/creation, find solutions for individual business needs, make linkages between businesses and their communities, and coordinate City services.
Negotiated Sales Program
The Negotiated Sales program arranges the sale of City-owned properties for redevelopment. Properties in the department’s inventory consist of vacant residential, commercial, and industrial land and also improved properties. Cost write-downs may be available for projects that provide tangible public benefits, such as affordable housing units, new or retained jobs, or other features. Property values are established by a market appraisal prepared by an independent appraiser hired by DPD.
Purchasers must demonstrate:
- Financial ability to complete the purchase
- Experience to execute proposed development
Contact: 312.744.LAND (5263)
Neighborhood Business Development Centers
Neighborhood Business Development Centers, or chambers of commerce, assist with a wide range of neighborhood business services such as getting new small businesses started, troubleshooting City-related issues, connecting businesses to financial resources, marketing assistance, and networking opportunities. Businesses can also get support from specialty chambers that are ethnic or industry-based.
Contact: 312.74-GOBIZ (744.6249)
New Markets Tax Credits
The New Markets Tax Credits program is a federal initiative that generates employment and other economic development benefits in low-income communities. The program works through the Chicago Development Fund to provide income tax credits to financial institutions in exchange for investment in businesses or real estate projects in qualifying areas.
Projects are located in areas experiencing economic distress and typically include:
- Industrial businesses and developers of industrial facilities
- Developers of grocery-anchored retail developments within identified eligibility areas
- Cultural and community facilities
Requests for Proposals (RFP)
DPD issues RFPs to solicit redevelopment proposals for specific City-owned sites, such as vacant fire and police stations, vacant lots, and other types of properties in the City’s inventory. RFPs are issued for key redevelopment sites throughout the year.
Proposals are reviewed by an evaluation committee that consider:
- Financial feasibility
- Developer experience
- Alignment with the goals of the RFP
Contact: Specified within each RFP Current RFPs are posted on the DPD web site at www.cityofchicago.org/dpd.
Riverfront Improvement Fund
The Riverfront Improvement Program facilitates the rehabilitation or replacement of deteriorated riverwall structures by providing assistance to riverfront property owners. Assistance is provided at project completion. Amounts vary based on the type of land use and type of riverfront structure.
Small Business Improvement Fund (SBIF)
The SBIF program uses TIF revenues to help owners of commercial and industrial properties repair or remodel their facilities for their own businesses or on behalf of tenants. Program participants receive matching grants to cover half the cost of remodeling work, with a maximum grant amount up to $150,000 for industrial properties and $100,000 for commercial properties. Grants do not have to be repaid. Grants are provided to business and property owners in eligible TIF districts after remodeling work is completed.
Eligible costs include but are not limited to:
- New windows, floors or roof
- Sign removal and replacement
- Tuck pointing
- New heating, ventilation and air conditioning
- Improvements for disabled access
- Purchase of adjacent property
Small Business Loan Program
Small business loans up to $250,000 are available through a partnership between the City of Chicago Treasurer’s Office and community-based lenders. The program targets a variety of small and high-growth companies that can utilize loan proceeds for equipment purchases, working capital, inventory, leasehold improvements, expansion, contract purchase-order financing, and other uses.
Program participants may include :
- Businesses operating for less than three years with insufficient collateral to qualify for a standard loan
- Businesses operating for at least three years with less than $2 million net sales over the last two years
- Small contracting firms with less than $2 million net sales over the last two years
Special Service Area (SSA)
The SSA program is a mechanism for funding business-oriented support services and programs within contiguous industrial, commercial and residential areas. The services and programs are financed through localized property tax levies and managed by a local service provider, including not-for-profit development corporation, chambers of commerce, and business and industry groups.
Services are provided to businesses within a specific geographic area and include:
- Maintenance, beautification and safety
- Business retention/recruitment
- Marketing, advertising and promotions
Additional information is available here.
Streamlined-TIF provides expedited access to valuable grants for the improvement of industrial, commercial, retail or residential mixed-use properties in TIF districts citywide. The program incorporates an easy-to-use application form and efficient approval process to pay up to 25 percent of renovation, expansion, or redevelopment costs.
Assistance ranges from $25,000 to $1 million and can be applied toward:
- Land acquisition
- Site preparation
- Environmental remediation
- Building rehabilitation and repair
- Tenant improvements
- Professional fees
- Construction period interest costs
- Job training and welfare-to-work programs
Tax Increment Financing (TIF)
TIF provides financial assistance to businesses that are investing in designated parts of the city that are blighted or in danger of becoming blighted. Funds for private development projects are allocated to build and repair roads and infrastructure, clean polluted land, and put vacant properties back to productive use. Funds are generated by growth in the Equalized Assessed Valuation (EAV) of properties within designated districts over a period of 23 years. Businesses utilize the new revenues, typically generated by their own properties, for specific purposes that are identified in redevelopment agreements that are subject to approval by the Community Development Commission and Chicago City Council. The assistance is typically provided in annual installments following a project’s completion.
Development costs that may be eligible for TIF assistance include:
- Studies, surveys and marketing expenses
- Acquisition of land and site preparation
- Building rehabilitation/repair
- Fixtures and leasehold improvements
- Public works improvements
- Job training and welfare-to-work programs
- Certain financing costs
- Relocation costs
- Payments in lieu of taxes
- Taxing district capital costs
- Day care services
- Certain costs associated with the development of affordable housing
Contact: 312.744.0765. Additional information is available here.
TIFWorks funds workforce-training initiatives for companies located in designated TIF districts. With TIFWorks support, businesses can become better equipped to improve performance and productivity, expand product lines and gain new customers. Training types may include classroom training, on-the-job training, seminars, workshops, pre-packaged training courses, and related workforce development instruction.
TIFWorks program participants may include:
- A business, labor or industry association located within an eligible TIF district
- A group of employers with common training needs that will place trainees in a business or businesses located within an eligible TIF district