School Board Members are Feeling Left Out of City Discussions on TIF

While Elmhurst District 205 School Board members seem to like Elmhurst Patch, they would prefer not to learn about the city's progress on creating new tax increment financing districts by reading about it here.

School Board members have asked to be included as collaborative partners with the city in the TIF planning process, but some discussions are moving forward without them.

School Board member John McDonough on Tuesday referenced at the city's Development, Planning and Zoning Committee the night before. He also attended that committee meeting and was able to answer some of School Board members' questions about the three proposed TIFs.

The DPZ Committee heard Phase I reports from consultants, and while no final decisions have been made, committee members will likely ask the City Council to approve moving to Phase II, which deals with creating a plan for land use and financing, McDonough told the School Board.

"There is no guarantee they will move forward with all three, however there is a certain level of detail they are providing that would indicate an inclination to go with these," he said.

The proposed TIF districts are York Road between North and Grand avenues, the York and Vallette area, and Riverside Drive, which doesn't affect District 205. Much of the DPZ Committee's discussion Monday revolved around moving the Hahn Street development from its existing TIF 1 district into a new TIF on North York. The nine years left in TIF 1 is not long enough to get the development off the ground, consultants said, and TIF 1 cannot be extended again. TIFs can have up to a 23-year lifespan.

"They felt that more time was needed to identify revenue to retire debt that would be needed for Hahn Street initiatives," McDonough said. "That is the reason they are thinking of moving it to the brand new TIF."

Board member Maria Hirsch said she had learned about the discussion after reading about it on Elmhurst Patch.

"I'm not a TIF expert, but after Phase II, then come public hearings and they have locked down what the TIF areas are going to be," she said. "My information came from an article that was posted online. I would prefer we were communicating directly with the organization that is moving this forward. We want to be cooperative. We have expressed an interest in being collaborative and working with them."

Why the School Board is Concerned

A TIF district freezes the assessed value of an area that is to be developed. Taxing districts, like District 205, continue to collect property taxes from TIF properties based on their frozen assessed value, even as the actual property value increases over the life of the TIF. The difference between the frozen value and the actual value is called the increment, and that money is an incentive to developers, who can use it to develop the property.

More than 100 properties are being considered for the North York TIF, and development must begin within seven years of creating the TIF.

School districts tend to not like TIFs because they say they will lose out on tax revenue that would come from increasing property values over many years. However, the city can release properties from a TIF district, or declare a surplus of remaining increment that can be distributed to other taxing districts.

A Seat at the Table

The School Board wants to have input in whatever decisions the city makes on TIF.

Representatives from the city talked to School Board members in December and said they would bring more information back to the board as it became available, board President Susan DeRonne said.

"Are they coming back? We started this communication through the (District 205) Finance Committee. Will it be on the finance agenda?" DeRonne said. "I just don't want to all of a sudden read in the paper that there are three new TIFs, and we say, 'Oh, where were we?' "

She also said that the last time a representative from the city came and talked to the committee, they said the consulting firm didn't think the Vallette TIF was feasible.

"Why, now, are they considering Vallette as well? What's changed?" she asked.

Board members also were concerned about the city's ability to carve out properties from one TIF and place them in another, adding potentially 14 years of frozen valuation in the case of Hahn Street.

"What's to prevent them from carving out other pieces of TIF I and saying, 'We're not done with this either. Let's just put it in a new TIF'?" DeRonne said. She also suggested hiring legal council.

"We want to be good citizens of Elmhurst, as well as good stewards of School District funds," she said.

Superintendent David Pruneau said the Finance Committee, along with Assistant Superintendent of Finance Chris Whelton, will oversee the process with the city. They can make recommendations, get in touch with lawyers and assign one or two board members to go to City Council meetings.

"The Finance Committee can take the lead and bring it back to the full board," Pruneau said. "They've already been into this pretty deep; they have a knowledge base."

The Finance Committee, which consists of Jim Collins, Chris Blum and McDonough, will schedule additional meetings in order to follow the process through to its conclusion.

"How the TIFs are structured will determine whether they are supportive of education and our students," board member Karen Stuefen said. "We, as a full board, will need to hear updates. This will have to be an agenda item at every meeting."