Tax Increment Financing (TIF) Districts are development tools that city planners all across this country have used. The Illinois Legislature started allowing TIFs in 1977. The TIF law gives municipalities the power to address the adverse conditions of “blighted” and “conservation” areas by establishing redevelopment projects deemed essential to the economic well being of the community. TIFs run for a maximum of 23 years. Other taxing bodies like Park and School Districts cannot create TIFs; they can only prevent extensions of existing TIFs.
I voted for TIF 4 because I believed it was essential to promote the development of an area of Elmhurst (the portion of North York Road that is north of I-290) that has substantially under performed other commercial areas. Once a property is put into a TIF, the assessor determines its valuation, and then the “incremental” taxes that result from valuation increases go into the TIF to pay for redevelopment costs.
For example, the downtown TIF (TIF 1) issued Bonds, took the proceeds of those Bonds to make substantial infrastructure improvements (parking decks, etc), then the Bonds are paid off by the TIF “increment”. However, if a TIF is unsuccessful in significantly improving valuations, and there aren’t sufficient “increments” to make the Bond payments, the City would have to use City money to pay off the TIF Bonds. TIF 1 in our downtown area has been a success. Values have gone up.
Does this mean that TIFs always work ? It seems that some people are always against TIFs and some people are always for TIFs. I am experienced enough to know there are no absolutes when it comes to TIFs. A TIF District is a government stimulus, and local government interventions simply cannot be guaranteed to trump national economic trends. The test of whether a TIF works is not whether valuations just go up. The true test is whether valuations increase more than they would have without the stimulus.
But I want to make it clear that I was disappointed that the Hahn Street parcel was dropped from TIF 1, and subsequently added to TIF 4. The Hahn St. parcel was put into TIF 1 in 1986; then by virtue of the 2004 Agreement (TIF Extension) with District 205, was extended for 12 more years (until 2021) in exchange for the release of certain parcels. My reservation on TIF 4 related to the need to move the Hahn Street parcel into the new TIF to give it more time to develop. I wish that the project had been completed a number of years ago as planned, however with the downturn in the economy it just didn't work out.
Going forward though, until we end one or more of our current TIFs, I pledge to support a moratorium on any future TIFs. If TIFs 5 & 6 (as currently mapped by the consultants) are approved, the majority of the commercial properties in Elmhurst will be in a TIF District.
With the State of Illinois fixated on incrementally dumping a portion of teachers’ pension costs on local School Districts, it is simply inconceivable to expect residential taxpayers to bear the burden of the stimulus that the City wants to give to commercial properties. We have a state government that is insolvent, our residential taxes are steadily increasing, and our property values continue to be flat. This is just not the time to charge full speed ahead with any more government subsidies.