A compromise for “blighted” TIF districts
There is a possible compromise to resolve the “questionable blighted areas” issue with the state’s Tax Increment Finance Act stating that the Joint Review Board must determine ”if not but for the TIF,” economic development would not have occurred.
TIF districts need to allow the economic development to apply to all taxing bodies and be transparent to all, so that taxpayers, who ultimately foot the bill in some way for these developments, receive some of the benefits in property tax relief.
The TIF and Enterprise Zone tax levies are removed by Winnebago County after each taxing body’s total tax levy extension is calculated. The tax levy diverted from the taxing districts is approximately $5 to $6M dollars.
The budgets reviewed by the respective Finance Committees of these taxing districts do not even include the tax revenue diverted to the existing TIFs, because the taxing bodies never receive the money!
One suggested compromise would be to allow the other taxing bodies to share the TIF tax increment, especially in contested areas of blight, where economic development might be established in the area with or without the TIF during economic recovery.
The mandatory meeting of the JRB could determine a percentage of the tax increment to be distributed among the other taxing bodies for that TIF area, based on a formula that takes into account inflation and appreciation of the property, in addition to the tax increment increase due to the TIF improvements over the 23 year period.
After that percentage is determined, the tax levy extensions of each taxing district would then be reduced by a smaller amount based on the levy paid to that TIF from each taxing district on a pro-rated basis.
That way, the economic development helps pay for all services provided by the other taxing bodies over the 23 year period of the TIF, and will reduce the pressure for each to continually raise their taxes to the maximum allowed by the PTELL law.
The TIFs should be pay as you go, because the taxpayers are getting tired of subsidizing $2M to $4M in loans that are floated through the General Fund or transferred from TIFs that work to TIFs that don’t.
The last comment concerns the transparancy of the TIF fund – how the money is spent! The TIF balances and/or deficits are there for all to see. However, the expenditures, transfers between adjacent funds, the reasons for the transfers are all off budget.
The city council should have that data available to them for the asking. If for any reason that data is not provided, then the council member requesting the data should file a Freedom Of Information Act request to obtain the information, as other elected officials have had to do in the recent past.
It’s public information and should be made available to our elected representatives. The information is needed to understand the inner workings of the TIF process and to understand the tool needed for economic development in our entire community.