Marc on the TIF District
What is a TIF district? Why is the current situation important to understand?
The Current TIF District
Fifteen years ago, to finance the new development in Uptown, the Town Council established a Tax Increment Financing (TIF) district. The TIF district encompassed all of Uptown, and the Council agreed that timeframe would be 23 years. We are now seven years away from the TIF’s expiration.
What Happens in a TIF District
At the start of the TIF term, the property values within the TIF district are assessed. The property taxes collected from the businesses in the TIF district are distributed as usual to the receiving bodies, such as Unit 5, Heartland Community College, and Normal Public Library. Then, over the term of the TIF district, as the actual property values increase—and therefore as the amount of collected taxes increase—the receiving bodies do not get the tax increase. Instead, they continue to receive the same amount as before. The excess instead goes to the Town of Normal to help pay for ongoing development projects.
A Simplified Illustration
Say a property is assessed at $1000, and the property tax rate is 10%. The taxing bodies would get $100. Then the Town establishes a TIF district on that property, and they develop and improve the property. The property value rises to $1500. Under the terms of the TIF, the taxing bodies would continue to receive the same $100, but the extra $50 would go to the Town. At the expiration of the TIF, the Town no longer gets that $50. Instead, the taxing bodies once again receive the full 10% property tax, which is now $150.
The development of Uptown is nowhere near paid for. The TIF pays only a quarter of the debt costs and must be supplemented with money from the local hotel tax, sales tax, and the recently created food, beverage, and motor fuel taxes. Instead of Uptown paying for itself, the town has been plunged into debt to the tune of $94 million and taxes have increased substantially.
In addition, at the establishment of the Uptown TIF district, residents were told to rest assured that at the end of 23 years, the development projects would be fully paid for, and the schools, the library, and the other taxing bodies would then receive the benefit of re-development.
However, the Council went on to create plans for Uptown 2.0, and even though we are currently seven years away from the expiration, it is now devising ways to extend the expiration date of the TIF and keep the extra property taxes to continue funding more Uptown development projects. The council expects the schools, the library, and the other taxing bodies to wait even longer for their fair share.
The town government must keep its promises and stick to the plan they offered the residents. We must not extend the TIF—the schools have struggled long enough. We must pay down the debt more aggressively to reduce the $50+ million we will waste in interest. All of this is accomplished by reprioritizing the revenues we already have so that debt payments take precedence over multi-million dollar developer giveaways.