It appears the city of Elmhurst and School District 205 are very close to signing off on an agreement that spells out how the city is going to share property tax revenue from its tax increment financing districts.
TIF districts freeze property values for up to 23 years to encourage redevelopment in areas considered blighted. TIFs generate revenue through new construction in the district. The difference between the frozen property value and any new growth goes into a fund to pay for improvements or redevelopment in the district.
Two of the three elements of the revenue sharing plan have not been disputed by either side.
First, the city will pay a $1.5 million surplus from the Lake Street TIF to the School District and Elmhurst Park Board. The School District's portion is about $1 million.
Second, the city has agreed to share 10 percent of any new revenue earned after the 10th year of the new TIF 4 on North York Road. This could be as much as $4 million over the life of the TIF, although the amount is contingent on market conditions, board members said.
It was the third leg that stalled the agreement.
The city agreed to give $6 million to the School District for capital improvements at Conrad Fisher Elementary and Churchville Middle Schools, which the city included in the North York TIF. School officials have been in favor of this but wanted more than just a promise from the city that they would share the $6 million.
"We were looking for something more definite than just 'trust me,' " School Board President Jim Collins said Tuesday.
The city never did end up tightening the language to the district's satisfaction, but they came up with another idea, Finance Committee Chairman Chris Blum said.
The city will dedicate 35 percent of the property tax increment generated from certain properties in TIF 4—estimated to be about $3 million—to District 205 after the initial investment put into those properties is recouped. Blum called it "collateral." The district won't see the money for about 10 years.
"It's basically those properties that were moved from TIF 1 to TIF 4 (Hahn Street, CVS Pharmacy, Panera Bread)," Blum said. "I would call it a piece of collateral to support their promise, to give us a little more certainty and to demonstrate their good faith ... on that $6 million commitment."
The $6 million actually will be coming from all of TIF 4, but "the city has offered something we can point to and carve out," Blum said.
"This is something to help us sleep a little easier," he said.
Those particular properties within TIF 4 are "the first that are most likely to generate funds," Collins said.
Mariano's is in TIF 4, but the city already has promised a $1.25 million development incentive to the grocery store, initially making Mariano's a "user of funds" rather than a generator of funds, Collins said.
"They already pledged their beginning increment to Mariano's," he said. "We would have to be behind that."
Mayoral candidates have mentioned releasing the properties south of North Avenue from TIF 4 as soon as possible.
"How would that impact our ability to recoup the money?" School Board member Maria Hirsch asked.
"That would be better for us," Blum said.
The property would then be considered new growth that District 205 could levy against; no money would be going into the TIF fund.
"Our pro rata share of the property tax bill in town is 66 percent," Blum said. "If they were to return it to the tax rolls, we'd get more cash flow."
Board members Susan DeRonne and John McDonough had reservations about moving ahead.
"Has this passed the blessing of our attorney?" DeRonne asked.
The attorney had only gotten the draft on Monday night, Superintendent David Pruneau said. But attorneys for both sides have been following these negotiations for months and are familiar with the terms.
McDonough said that while he's "thankful something very substantive is on the table," he wants the public to have a chance to view the agreement.
"We have an obligation to put something out there to show people before we vote," he said.
Board member Shannon Ebner said adding public input into the mix after all these months of negotiations "would be very complicated."
"If you got public comment, then what? Are you going to change the document? Change the terms of the agreement?" she asked.
Illinois law states the city is under no obligation to enter into an agreement with any other taxing body with regard to TIF.
"They are doing us a favor," Hirsch said. "They could give us nothing."
But a previous TIF agreement in 2004 left some mistrust among board members. The city "gave an expectation of surplus with an intact TIF 1," McDonough said. City officials then moved part of TIF 1, Hahn Street, into TIF 4 and changed the calculation of the agreement.
"They changed things," he said. "This is not a gift. This is not charity."
Hirsch said whether they feel the city owes them something or not doesn't matter.
"I'm sure we all have an opinion on it, but at this point, we have an opportunity to enter into a new intergovernmental agreement on this new TIF, and it is advantageous to our schools," she said.
Collins said he see it as "a very strong offer."
The board agreed to have attorneys from both sides draft a formal agreement, give School Board members a chance to review it, then post it for the public. The board will vote at its next meeting March 19; public comment will be taken before the vote.
Got a question? Something on your mind? Talk to your community, directly.
Just a short thought to get the word out quickly about anything in your neighborhood.
Share something with your neighbors.What's on your mind?What's on your mind?Make an announcement, speak your mind, or sell somethingPost something