TIF History Lesson

So you own property in a TIF district. You pay $5000 in annual property taxes. Your school district passes a referendum. Your property tax bill increases by $300 for your share of paying for the referendum. So now your tax bill is $5300. That $300 doesn’t go to the school district or towards the referendum. It goes to TIF. So does any other increase in your tax bill above the $5000 you paid before the TIF district was declared.

That’s how TIF works.

Oh, its supposed to work by investing those funds into the declared TIF district that results in private investment that leads to substantial increases in property values (which increases the tax base for all those dependent upon taxes) that wouldn’t have occured… if not for TIF.

Sometimes real life gets in the way of the best laid plans. Like now. Trying to increase EAV when property values are in a tail spin? Good luck with that. And if you are a school district in Illinois, and your taxpayers are paying back a referendum, you are desperate for increased EAV because otherwise you have to increase the rate you charge just to meet your debt obligation.

TIF can work wonders when used properly and as intended.

The DeKalb-Pond-Fisk neighborhood, once known as known as “The Haish Flats” subdivision, is about four blocks north of the downtown business district.  In 1904 local builder/businessman Jacob Haish built a mixture of single family homes and two story wooden apartment buildings for his factory workers.  The innovative Haish built the Haish Flats out of materials salvaged from the 1893 World’s Columbian Exposition in Chicago.

As time marched on the neighborhood deteriorated. As the homes became less desirable the crime rate increased. But TIF financing provided the tool for a cooperative effort of the City Council, City staff, a citizen group called the DeKalb-Pond-Fisk Neighborhood Block, and local builder/developer Steve Irving for redevelopment of the Haish Flats that preserved some of the sound older homes and replaced those beyond viable investment with fourteen new single-family dwellings, and a children’s park. This project was one of the first TIF programs undertaken.

In 1993 Barb City Manor and the City of DeKalb entered into an agreement that dedicated TIF funding for 20 years to the retirement center for major repairs to the former Joseph F. Glidden Memorial Hospital. Under that agreement, which ends June 30, 2013, the City of DeKalb pays for approved repairs above and beyond $10,000. Barb City Manor is located in TIF District 2.

In 2000, the city of DeKalb created the County Home TIF District in an attempt to redevelop the old DeKalb County Nursing Home into private development that would generate a substantial increase in the tax base. The Target shopping center is a result. That TIF district was retired 13 years early as it fulfilled its cost-recovery obligations. The County Home and the County Farm across the street previously generated no revenue for any of the taxing bodies and in the case of the County Home repairs were far beyond viable investment.

Eventually more and more TIF funding was spent on public works projects. The park district received funding for preservation of the old First National Bank building that is now home for the DeKalb Chamber of Commerce and ReNew DeKalb. The library received funding for the Haish Memorial Library repairs. The Egyptian Theatre received monies for needed repairs and renovations.

When the Central TIF District was extended in 2008 with landmark legislation signed by then Gov. Rod Blagojevich (Public Act 95-0709, which became effective January 29, 2008) 50% of the increment resulting from the ad valorem taxes levied upon real property in the Redevelopment Project Area would be declared surplus and distributed as provided for in an intergovernmental agreement between the City of DeKalb and taxing districts that extend into the Central TIF District. The money returned to the taxing bodies was done so “unencumbered” meaning it could be spent any way the receiving governmental unit desired.

In February of 2008, voters approved a $110 million referendum for school construction in District 428. At that time it was projected that the owner of a $200,000 home would pay $270 per year in additional property taxes to repay the debt obligation of the school construction.

Ordinarily, all properties in the TIF district would be levied for the school referendum tax but the monies collected would go into the TIF fund for reinvestment purposes. Under the intergovernmental agreement, signed by the late Mayor Frank Van Buer and school board president Mike Verbic, the school district would receive 50% of the TIF funds back (and that would include the increment for the referendum tax).

Technically, the portion of the referendum tax returned to the school district would be unencumbered TIF money and not referendum money.

When the Central TIF District was extended its boundaries were also expanded to include portions of a residential neighborhood known as the 5th Ward North Neighborhood which contains 126 buildings, of which 118 (94%) are 35 years of age or older as determined by field surveys. According to the City of DeKalb’s 2008 Amendment to the TIF Redevelopment Plan and Project many of those buildings are “obsolete in that they are no longer being used for their design use as single family dwellings, which results in a number of issues, including a widespread lack of adequate off-street parking and open space, which exerts a blighting influence on neighboring properties.”

City Manager, Mark Biernacki, told members of a citizen group called the Ellwood House Historic District that their help was needed in making a good neighborhood better. He has placemarked $100,000 in TIF funds for the North Fifth Ward Neighborhood in the FY2012 budget, subject to city council approval. The citizen group is looking to “formalize” its organization to help determine how future TIF funds could be spent. Their next meeting is tentatively scheduled for May 4.