Elmhurst City Council will vote soon to create a 4th Tax Increment Financing District
What May Have Started As A Good Idea Has Degenerated into a Justification for a
Boondoggle and has Become a Corrupt Political Process

What is a TIF district?
Tax Increment Financing (TIF) is a favorite government tool used to spur economic development in areas identified as legally blighted or underperforming.  Elmhurst currently has three TIF districts and is considering a fourth to assist the north side of town.   

How do TIF districts work?
City Hall provides developers and businesses with subsidies to lure them into town or to improve existing properties.  At the most basic level, when a TIF district is created property tax revenues that are collected over a certain base amount are redirected to City Hall for its exclusive use within the TIF district for a period of 23 - 35 years rather than being distributed to numerous taxing bodies like the school district and park district.  The diversion of property tax dollars away from the other taxing bodies and into the TIF district creates a TIF “piggy bank.”

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City officials site success of previous Tax Districts

By Dan McLeister for The Independent

In speaking against approval of the N. York Tax Increment Financing (TIF) District, several citizens stated that market conditions are worse than the first three TIF Districts which City officials used as examples of what could happen with a fourth one.

Stephen Hipskind (4th Ward), chairman of the Finance Committee of City Council, said that property values had tripled or almost tripled in the first three TIF Districts.

Terry Pastika, executive director of the Citizen Advocacy Center (CAC), went beyond market conditions and accused City officials of “turning a good process into a corrupt process and creating a problematic situation.  This process looks like gerrymandering properties so Hahn St. properties south of North Ave. can be brought into the N. York TIF Districts of properties along York St. north of North Ave. to Grand Ave. The City is privatizing profit and socializing costs,” the lawyer said in her contention that all property owners in Elmhurst will end up paying for the N. York TIF District.

At the August 6th public hearing, the CAC director also noted that the decision in July by the Joint Review Board of various local taxing bodies “was not an overwhelming endorsement” since representatives from School District 205 and the Elmhurst Park District did not vote for approval. “The Park District and the School District feel like their backs are against the wall and they felt cut out of earlier discussions about the N. York TIF. Now there have been closed door meetings to determine what the payout might be”

(Incremental property tax increases from improvements in a TIF District are kept in a special City fund for up to twenty three years before being released to other local taxing bodies like the School District, which get more than half of the property taxes, and the Park District. Some property tax money was released early in the first TIF District along York St. south of North Ave.)

(District 205 School Board President Jim Collins was in the audience at the August 6th public hearing, but he did not speak during the public comment period.)

In addition to saying that market conditions are different now than during the time the first three TIF Districts were started, resident Tamara Brenner contended that the City “was moving fast” with the N. York TIF District. After City officials mentioned the possibility of a final action vote in two weeks, she noted that the TIF District Act from the state allows up to ninety days for local governments to make a decision.

Also, Brenner said she would like to know about the information behind the assumptions by the consultant to the City that property taxes could grow to $105 million to $150 million in twenty three years. Neither a representative from Kane McKenna nor any City officials gave details about the assumptions.

Finally, Brenner wanted to know how much discussion there had been in City meetings about alternative methods of financing such as a special sales tax district to finance improvements, instead of a TIF District.

Another resident, Craig Nelson, also urged the City to “slow down” and pay off bonds for the first three TIF Districts. “Currently the commercial real estate market is in disarray.”

Mentioning a specific situation, an attorney for the owners of Hamburger Heaven on the southeast corner of North Ave. and York St. noted that his client was concerned about the possible elimination of his business. John Skoubis noted “Hamburger Heaven has been an icon for decades in Elmhurst.”

(It is not clear what would happen to Hamburger Heaven if properties on York St., south of North Ave. including nearby Hahn St. land parcels were voted by the City Council to be included in the N. York TIF District.

The owner of Wendy’s restaurant on the north side of the proposed District, stated that he was against the project because taxes are already too high.

An overall statement was made by resident Claude Pagash. “If the District does not work out, then the public will be stuck paying any City obligations. I don’t’ like the idea of residents being on the hook.”

http://www.theindependentnewspapers.com/news/citizens-speak-out-against-n-york-tax-district/

One resident questioned the validity of the public hearing, considering TIF 4 already was approved in committee last month.
Elmhurst Patch By Carol Kania Morency

Elmhurst may already have three mostly successful tax increment financing districts in town, but that is not enough to convince residents at a Monday public hearing that the city needs a fourth.

The hearing, which is required by law as part of the process for a municipality to create a new TIF, was a chance for residents to have their say about the new redevelopment district slated for a 1.8-mile stretch along North York Road. Most of the speakers were opposed to the project, and they posed many questions to the City Council.

TIF districts freeze assessed property values for local taxing bodies for up to 23 years to encourage redevelopment in areas considered blighted. TIFs generate new revenue through new construction in the TIF district, or if the township assessor increases the assessed value of the properties in the TIF district. The difference between the frozen property value and any new assessment or growth goes into a TIF fund. The city then uses this money to pay for any public improvements or to help finance redevelopment projects in the district.

The proposed new TIF would begin at the Hahn Street property, just south of North Avenue, and continue north to Grand Avenue. It would include the new Mariano's property at York and Industrial Drive, as well as the former Steven's Steakhouse and other vacant businesses.

According to Robert Rychlicki of TIF consultants Kane McKenna and Associates, the equalized assessed valuation for the North York TIF would likely be set at about $32 million. The TIF is projected to generate up to $150 million after $89 million in public and private development.

Rychlicki reviewed the results of the city's three current TIF districts. The City Centre TIF was created in 1986 with an EAV of $21.65 million and in 2011 had an $85.3 million assessed valuation. The Lake Street district began in 1993 with a $4.57 million EAV. In 2011, the same properties recorded a $16 million EAV. And the district at Route 83 and St. Charles Road was created with a $4.35 million EAV in 1996 that grew to a $12 million assessed valuation.

But most of the speakers at the public hearing had serious concerns about a fourth TIF.

“Everybody pays for the TIF,” said Terry Pastika, attorney and executive director of the Citizen Advocacy Center in Elmhurst. “You are privatizing profits and socializing the cost of development.”

Pastika said it was the inclusion of properties south of Interstate 290 that made the project problematic. She accused the city of stretching the district south to North Avenue just to be able to include Hahn Street, which is part of a previous redevelopment project planned by Morningside Group. Morningside, citing a sagging economy, was let out of its obligation to develop Hahn Street earlier this year. Hahn Street currently "lives" in TIF 1 and would be moved to TIF 4, adding 23 years of frozen valuation to the property. TIF 1 is set to expire in nine years.

Resident Tamara Brenner posed a series of questions to the council: Is creating a new TIF district the only way to offer incentives to businesses? Is it a good idea to establish a TIF district in this economy? Why was the city having a public hearing after the Development, Planning and Zoning Committee recommended approval of the TIF at its July 9 meeting?

Brenner also is dismayed at the quick pace of the movement to create the fourth TIF.

“This has moved along as fast as humanly possible under the TIF act,” she said.

The city has to wait at least 14 days after the public hearing to approve the establishment of the district. The DuPage County clerk will set the EAV for the properties after the ordinances creating the North York district are approved.

http://elmhurst.patch.com/articles/new-tif-gets-unfriendly-welcome

Residents should be outraged at City’s TIF plans, CAC exec says

City Hall is considering a fourth tax increment financing district (TIFs), estimated at $89,000,000.  The proposed TIF is massive in economic terms and City Hall calls them a “shot in the arm” to stimulate growth in areas where property values are stagnate. That “shot” is government subsidies to lure developers to an area that is otherwise undesirable to certain of these developers. Where does the cash strapped City generate the subsidy? They claim from properties only within the TIF district.

If  it were only that simple! Subsidies are generated by the City freezing the tax base of a specific area for every governmental entity at the 2012 level for 23-36 years. As property values increase over time the difference between the 2012 level and every year after goes into the City’s TIF fund rather than to the school district, park district, etc.  Sometime between the years 2035 and 2048, the City benevolently unfreezes the tax base, allowing the frozen out taxing bodies to access the property tax growth. What City Hall does not advertise is that TIFs ensure that everyone pays more to keep the affected taxing bodies afloat during the TIF period.  This is because TIFs change the math equation for how property tax rates are calculated, resulting in increased tax rates for the other taxing bodies.

If the City thought TIF 4 was a great idea, why did they wait until the 11th hour to engage the school and park district in public discussions only, to tell them that it was too late to make substantive changes? TIF 4 may have started as a good idea but the effort has been corrupted by a map with unnecessary properties and an unacceptable bully in the sandbox process.

Furthermore, the City’s actions will result in closed door discussions regarding TIF intergovernmental agreements, which will be cash payouts to the school and park district to lessen the economic blow.

Elmhurst residents should be outraged and the City Council should vote TIF 4 down until a truly public and transparent process is followed for all involved.

Ms. Terry Pastika
Executive Director/ Community Lawyer
Citizen Advocacy Center

Link to related article :
Joint Board okays new TIF, though some had asked for delay which quotes Terry Pastika www.theindependentnewspapers.com/news/joint-board-okays-tif-area-some-had-asked-for-delay/

Letter: Elmhurst Residents Should be Outraged at the City's Handling of TIF 4

Citizen Advocacy Center executive director says TIF 4 should be voted down until all the facts can be brought to light.

City Hall is considering a fourth tax increment financing district (TIF), estimated at $89 million. The proposed TIF is massive in economic terms, and City Hall calls them a "shot in the arm" to stimulate growth in areas where property values are stagnant. That “shot” is government subsidies to lure developers to an area that is otherwise undesirable to certain of these developers. Where does the cash strapped city generate the subsidy? They claim from properties only within the TIF district. 
 
If it were only that simple! Subsidies are generated by the city freezing the tax base of a specific area for every governmental entity at the 2012 level for 23-36 years. As property values increase over time the difference between the 2012 level and every year after goes into the city’s TIF fund rather than to the school district, park district, etc.  Sometime between the years 2035 and 2048, the city benevolently unfreezes the tax base, allowing the frozen out taxing bodies to access the property tax growth.

What City Hall does not advertise is that TIFs ensure that everyone pays more to keep the affected taxing bodies afloat during the TIF period. This is because TIFs change the math equation for how property tax rates are calculated, resulting in increased tax rates for the other taxing bodies.
 
If the city thought TIF 4 was a great idea, why did they wait until the 11th hour to engage the school and park district in public discussions, only to tell them that it was too late to make substantive changes? TIF 4 may have started as a good idea but the effort has been corrupted by a map with unnecessary properties and an unacceptable bully in the sandbox process. Furthermore, the city’s actions will result in closed door discussions regarding TIF intergovernmental agreements, which will be cash payouts to the school and park district to lessen the economic blow. 

Elmhurst residents should be outraged and the City Council should vote TIF 4 down until a truly public and transparent process is followed for all involved.
 
—Ms. Terry Pastika, Executive Director/Community Lawyer, Citizen Advocacy Center, Elmhurst

http://elmhurst.patch.com/articles/letter-elmhurst-residents-should-be-outraged-at-the-city-s-handling-of-tif-4

Related Topics: Citizen Advocacy Center, City of Elmhurst, TIF 4, and Transparency