School Board Unanimously Signs Off on City-School TIF Agreement

Rumors have been going around that Elmhurst Unit District 205 was offered $1 million in tax increment financing surplus from the city of Elmhurst, and the School District turned it down.

School Board President Jim Collins said Tuesday, it's partially true.

"A year ago, the city did offer us $1 million surplus out of TIF 2," he said. "We did turn it down. We then spent the past year negotiating with the city, and we've managed to turn that $1 million offer into $10 million."

The School Board on Tuesday unanimously signed off on the intergovernmental agreement with the city that spells out exactly how that $10 million will be distributed to School District 205.

What is TIF? TIF districts freeze assessed property values for taxing bodies for up to 23 years to encourage redevelopment in areas considered blighted. TIFs generate new revenue through new construction or an increase in property values in the TIF district. The difference between the frozen property value and any new assessment or growth goes into a TIF fund the city uses to pay for improvements or redevelopment projects in the district.

Highlights of the Agreement

In years 11 through 23 of the new North York TIF District (TIF 4), 10 percent of the tax increment will be declared surplus by the city and distributed each year to the school and park districts. The School District's portion will be 66 percent of the total surplus. So, every year, in years 11 through 23 (or until the TIF is discontinued, whichever comes first) the School District will receive 6.6 percent of the surplus increment. That amount is estimated to be about $3 million to $4 million over the life of TIF 4.

Churchville Middle School, among the district's neediest in terms of capital improvements, and Conrad Fischer Elementary School will be reimbursed with TIF surplus up to $6 million for building needs. The city has earmarked the first $3 million to come from the Hahn Street properties, once they have recouped the investment put into them.

After the TIF agreement is signed by all parties, the city also will declare a surplus in the Lake Street TIF District (TIF 2) of $1.5 million, of which the School District gets $1 million. The check will arrive between 60 and 120 days from the signing of the agreement. The City Council is expected to vote on the agreement at its next meeting.

Caveats

Predicting how businesses in the TIF districts will perform over a 23-year lifespan—or even a 10-year lifespan—is difficult. The dollar estimates are a best guess based on the city's cash-flow projections, Collins said.

"There is no crystal ball," he said.

School Board members also emphasized that the agreement does not solve the district's financial problems. Capital needs, alone, in the district top $28 million, board member Maria Hirsch said. Then, there are increasing needs for technology, special education, bilingual education and other budget challenges.

And, after the initial $1 million release of funds, the rest of the money won't begin showing up for years.

"The vast majority will not even begin until (this year's) second-graders are seniors in high school," Collins said.

It's "hard to quantify" how much tax revenue the district would have given up without an agreement as a result of the city's creation of TIF 4 and its moving the Hahn Street properties from TIF 1 into TIF 4, giving them potentially another 23 years off the tax rolls, board member John McDonough said. The School Board has an obligation to today's students and the students of the future, he said.

"TIF 4, as modified by the intergovernmental agreement, is the type of pay-as-you-go property we asked for from the start," he said. "It replaces every dollar of short-term revenue (the district might have lost) while allowing substantial incentives. I'm grateful for that.

"By being short-term revenue neutral, we are treating today's and tomorrow's students equally in terms of allocation of resources," he said. "This is the right way to use TIF: smartly, collaboratively. This truly fits the needs of this community and this School District."

Landmark Agreement

Board member and Finance Committee Chairman Chris Blum quipped that the intergovernmental agreement required more work and time "than any other four-page document I've ever negotiated in my life," but he is pleased to support it.

Not only does the language of the agreement appear in no other city intergovernmental agreement, "nowhere in Illinois has municipal government been as generous with their schools as our city has been with us," Collins said.

"Without a doubt, this is a landmark agreement," he said.

The way the TIF laws are written, the city is under no obligation whatsoever to work with other taxing bodies on disbursement of funds.

"The TIF law gives all the power and cards to the city," Superintendent David Pruneau said. "It's a tribute to the City Council that they negotiated the agreement they did."

He thanked the City Council, Mayor Scott Levin, city staff, school administrators and board members for not giving up.

"It would have been easy to throw up your hands, give up, start a war, make comments, ruin relationships," he said. "Our city and board need to be congratulated for being persistent and absolutely dedicated to doing the right thing for the students and community. I think that's rare."

No Public Comment

Tuesday's TIF discussion was held in workshop format. Board members intended for members of the public to share their comments about the agreement, which has been posted on the district's website.

But community members did not show up to the workshop.

"It's apparent the community is behind us and thinks we've done a good job," board member Susan DeRonne said.

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