TIFs coming under scrutiny

StoryImage( ‘/Images/Story//Auto-img-118417360832576.jpg’, ‘Photo by Stuart R. Wahlin’, ‘A Buckley Companies trailer sits on a vacant lot on North Second Street in Loves Park, within the bounds of a proposed TIF district.‘);
StoryImage( ‘/Images/Story//Auto-img-11841736349687.jpg’, ”, ‘Paul Nicolosi‘);

The Loves Park City Council gave its unanimous final approval July 2 to implement the North Second Street Tax Increment Financing (TIF) District Redevelopment Project and Plan. City leaders hope the 23-year commitment will bring new life to the corridor, which once thrived as the city’s downtown.

The 2-mile, 200-acre TIF district runs along North Second Street, from Pearl Avenue to Riverside Boulevard.

Mayor Darryl Lindberg (I) told aldermen: “I’d like to thank you for the continued support of the TIF district. I think a lot of good things are gonna happen as a result of your action that supported this.”

TIF districts, first authorized by the Illinois General Assembly in 1977, essentially borrow money against future property taxes to jumpstart redevelopment of blighted or conservation areas. In theory, assessed values within the district are frozen while redevelopment brings additional property tax revenues—the increment—to pay for the improvements.

The Loves Park TIF is the city’s first, but the City of Rockford has 14 TIFs designated, which include the Eastside, Garrison School, Hope VI, Kishwaukee/Harrison Plan & Project Area No. 1, Lincolnwood Estates I and II, North Main Street & Eddy Avenue, River Oaks, Rockford Global Trade Park Seventh Street, Southeast Affordable, South Rockford, Springfield Corners Redevelopment and Westside TIFs.

Some argue TIF districts are being abused and are pushing for reform of TIF laws. One such opponent, Cook County Commissioner Mike Quigley (D-10), argues TIFs are “back-door tax hikes” and serve as “reverse Robin Hoods” in a recent report.

Winnebago County, the Harlem School District, Harlem Township and the North Suburban Library District will not share in profits of growth, however. Although they are taxing bodies in the affected area, the amount of taxes they collect remains frozen for 23 years, despite the anticipated additional revenues.

Quigley’s TIF Fact Sheet states TIFs equate to secret tax hikes because, “Removing property value off the tax rolls increases tax pressure on Mr. and Mrs. Average Homeowner, Mr. and Mrs. Average Business Owner.”

Quigley and his staff studied Chicago’s more than 140 TIF districts and released a report April 19 indicating TIFs might not be living up to what they’re intended for. Quite often, Quigley says, developers are the only real winners.

The report, “A Tale of Two Cities: Reinventing Tax Increment Financing,” illustrates the need for serious reform of TIF legislation.

Quigley’s Director of Policy, Jason Liechty, worked on the study and told The Rock River Times TIFs lack transparency and accountability.

“Bad things happen in the dark,” Liechty said, “and this thing is practically hermetically sealed from public view—whether by accident or by design.”

Chicago Reader columnist Ben Joravsky has been following Quigley’s story as the commissioner has been the only official to speak out against TIFs.

Joravsky describes TIFs as “off-the-budget slush funds, raising taxes and diverting money from schools and parks,” while squandering property taxes.

Liechty explained, “This is a very arcane issue, and it’s hard to get folks interested in this unless we can get it to the point where it’s a real pocketbook issue.”

Liechty and Quigley have been fighting to have “true TIF information” included on Cook County property tax bills so taxpayers can decide whether the benefits of TIFs are worth the cost.

Quigley stated, “It’s long past time to return TIFs to their original purpose and stop misusing them to fund projects in thriving areas.”

June 18, Crain’s Chicago Business columnist Greg Hinz wrote of TIFs, “It’s too easy to spend it on frills, not priorities.”

Liechty agrees TIFs are often abused or unnecessary.

“Forty percent of the growth the city claims is caused by TIFs would have happened anyway,” Liechty said of the study’s findings. “A TIF is supposed to be used where it wouldn’t happen anyway.”

Another study, conducted by the Neighborhood Capital Budget Group (NCBG), states, “Tax increment financing is not cost-free when already-growing areas are designated as TIF districts.”

The NCBG is a coalition of nearly 200 economic development groups and community-based organizations in the Chicago area.

Liechty says half of Chicago’s prosperous downtown has a TIF designation, but pointed out the blighted areas—which TIFs are supposed to serve—do not seem to be benefiting.

Who, then, are the beneficiaries of TIF districts?

Liechty responded, “Well-connected developers end up benefiting quite well from this program.”

Loves Park hasn’t even worked out the details, but developers are already lining up for TIF funds. Each would receive $750,000 for infrastructure and other improvements.

The Buckley Companies first expressed interest in 2005 for their 1.26-acre lot at North Second Street and Pearl Avenue to be included in the TIF district.

Buckley President and Chief Executive Officer Paul Nicolosi also serves as city attorney for Loves Park, but indicated there was no conflict of interest.

In the Nov. 2-8, 2005, issue of The Rock River Times, Jeff Havens wrote: “Nicolosi said he ‘hoped’ The Buckley Companies ‘would not benefit any more than any other contractors in a TIF district.’ He added that as long as there is ‘no direct contact with the municipality’ and there is full disclosure of interests, any potential improprieties could be avoided.”

The Buckley Companies are also principals in two downtown Rockford TIF district projects—former Gas & Electric Building, 303 N. Main St., and forthcoming development at Church and Chestnut streets.

Nicolosi & Associates law firm—one of the eight Buckley Companies—also represents the Village of Rockton.

Nicolosi & Associates recently resigned as attorneys for Roscoe and Caledonia.

Taxes will begin going into the Loves Park TIF fund in 2008, with the district expiring in 2031.from the July 11-17, 2007, issue

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