From -- mongabay.com
We recently received an article forward by a PRU reader -- Time for TIF sunshine
The article explains "TIF districts—we'll try to make this brief—are supposed to help revitalize blighted areas that wouldn't otherwise be attractive to developers. By designating an area a TIF district, the city lays claim to the new tax dollars generated by rising property values in the district. Those dollars, some of which would otherwise go to schools, parks or county government, are theoretically plowed back into the TIF district to promote growth."
The article goes on to say that two Chicago Aldermen, Manny Flores (1st) and Scott Waguespack (32nd), "...aren't trying to shut down the TIF districts, which generated $550 million for the city in 2007. What they're worried about is accountability. Because there's so little oversight of TIF spending, those millions are basically a glorified slush fund for Mayor Richard Daley's pet projects" and that "For years, former Cook County Commissioner Mike Quigley railed about the TIF districts calling them "hidden tax increases" because they force local governments to raise taxes to offset the money siphoned off by the city."
Sound familiar?
The PRU Crew has spent much of the morning slogging through the swamp of TIF documents available for review.
We think a good place to start is by taking a look at the City's TIF district map (.pdf). The TIF district covers an area considerably larger than just the new Uptown redevelopment. All the property tax generating parcels within the TIF district are paying all incremental property tax increases, since the creation of the district, into the City's TIF fund.
We keep hearing that the Uptown redevelopment isn't yet fully "on-line" and supporting itself. O.k.
Well, what about all the other properties in the TIF district? Have those property values risen as a direct result of the Uptown redevelopment, as was promised would be the result when the TIF district was created? How much have those property values risen?
Remember people, the incremental property tax income is in addition to the millions in bond borrowing the City has done to finance the Uptown redevelopment.
Where exactly is all this money going?
We agree with the sentiments expressed in the Chicago Tribune article, it's time for some TIF sunshine.
April 23, 2009
Slogging Through the TIF Swamp!
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14 comments:
PRU, Are the other redevelopment areas, Higgins Corridor, Dee Park, and Executive Plaza TIF districts as well?
The Uptown TIF was a scam from Day 1, which is basically what the attorney hired by the D-64 board said at the Maine South hearing. He said there was nothing "blighted" about the TIF district and that it wouldn't withstand a legal challenge.
Too bad D-64's board didn't have the cojones to walk its attorney's talk.
Anon@4:23 --
No, none of those areas is inside the Uptown TIF district, nor have TIF districts been created in those areas. Executive Office Plaza is to the immediate East of the Uptown TIF district.
What about target area 4?
Anon@5:47 --
We're guessing you are asking if Target Area 4 is in the Uptown TIF district, and the answer is yes, it is.
Here are the City's descriptions of each of the Target Areas --
Target Area 1 is the library block. City Commons, reading garden, and parking lot completed in 2007/08.
Target Area 2 is the former water reservoir and pump station area.
Target Area 3 is the triangle block bounded by Touhy Avenue, Northwest Highway and Washington
Avenue.
Target Area 4 is the southwest sector encompassing Touhy Avenue, Main Street, Fairview Avenue, Garden Street and Cumberland Avenue.
Thank you! And I'm guessing you know why I asked about T.A. 4. As it seems there is interest in the redevelopement of this area.
I think the interest in TA 4 will go down after May 4.
I was actually thinking(hoping) the same thing.
it's what is being done just before May 4 that worries me!
Target Area 4 includes where the Historical Society currently resides...though not for much longer.
Their plans have them moving over to N. Prospect. Across the street from the Country Club.
I'm a big fan of PRU. Usually some very thoughtful discourse. But...
(And you knew there would be a "but")
Your views on TIF are stilted and partially incorrect. Let's examine a major misconception...
TIF dollars "would otherwise go to schools, parks or county government"
A well designed TIF follows the rule of "but-for". But for the TIF incentive, no new building or development would occur. If no growth would occur naturally, any new (incremental) taxes result from the TIF. Without the TIF, the tax revenues to schools etc. would be stuck at whatever the underdeveloped parcel was bringing in. That's why a TIF starts at a base EAV, to lock in what the schools were getting at status quo.
Schools pass a tax levy each year at an amount approved by their Board. Subject to tax cap limitations, the County will extend and the district will collect the entire legal levy. The existence of a TIF does not diminish this revenue stream. Ask your school financial officer!
Now, to save some howling, I recognize that not every TIF is purely new growth. Some development may have naturally occurred eventually. But school districts that support TIFs get several great benefits down the road.
With a little encouragement from PRU's loyal readers, I'll expand on those in my next post.
Thanks for your interest!
Anon@10:36 --
Read our post again. Your quibble would appear to be with the editors of the Chicago Tribune, as we have made no statements about our views on TIF districts other than agreeing that some TIF sunshine is in order.
Your "analysis" reads like the scripted and shallow defense most often offered by bureaucrats and development speculators who demand private development be subsidized with public dollars.
Your "analysis" is also wrong as to what schools collect during the usuual 23 year life of a TIF district, and wholly ignores the "hidden tax increses" discussed in the Tribune article.
PRU: I'm not sure of the motives behind Anon 4/25 @ 1036's post, but I do sense a lack of clarity with respect to TIFs. You're right that the Tribune article seems confusing. It seems to me the point of confusion is between TIFs -- which encourage developers -- and arrangements meant to improve blighted areas where developers otherwise might not take the risk of developing. This latter case probably has no basis in Park Ridge.
So what is a TIF?
Can everyone agree what TIF stands for? "Tax Increment Financing", right?
If so, here is a simple definition from Wikipedia: "TIF is a tool to use future gains in taxes to finance the current improvements that will create those gains." (The problematic word in that definition is "will" -- way too certain a condition! That's the problem for us in Park Ridge... we counted on future gains that are yet to come in, if they ever come in.) Here is a link to their article:
http://en.wikipedia.org/wiki/Tax_increment_financing
Also see the website of the Illinois TIF Association -- the very name of the group suggests a bad case of slippus envelopus!
http://www.illinois-tif.com/
Finally, a host of investigative articles by the Chicago Reader on TIFs in Cook County and Illinois:
http://www.chicagoreader.com/tifarchive/
I think the city council should immediately undertake a plain English, fully transparent review of all Park Ridge TIFs, their status, forecasted outlook and what we are going to do in the future. Until and unless that happens there seems little reason to create any more of these.
I would agree with PRU that all the info regarding the TA2 TIF should be completely public. It would help to end speculation as to its performance.
From the reading I've done on the subject, another reason towns use TIF is because it give them more control over the quality of the buildings, the streetscape and the ability to provide other public improvements.
Finally, it seems to me to be premature to say the TIF is a success or a failure. The buildings were completed only last Fall, and there can be no doubt that much of the difficulty in leasing and sales is the result of the economic meltdown we are all enjoying. An objective financial analysis ought to be done but tempered to the realities of the environment in which the development opened.
I hope the development is ultimately a gigantic success filled with new shops, loads of shoppers and new residents to enjoy and patronize all of the businesses and services offered in our town.
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