Should school districts, other local governments have the power to kill TIFs?

School districts are not generally enthralled with tax increment finance districts, frequently opposing them on the basis that they will lose property tax revenue.

In its latest Resolutions Committee Report from its Nov. 23 delegate assembly, the Illinois Association of School Boards adopted a recommendation calling for changes that included giving joint review boards authority to kill a proposed TIF district.

A tax increment finance district is a development tool local governments use to encourage development or redevelopment in blighted areas that would be too expensive to improve with private dollars alone. It diverts increased sales or property taxes generated to pay for specific improvements within the district. A TIF can last up to 23 years.

The joint review board is made up of representatives of each taxing body affected by the creation of a TIF, as required by state law. Its vote is advisory, not binding.

Skokie School District 69 brought the TIF issue forward for consideration at the assembly, where more than 400 delegates voted on proposed resolutions.

Giving the joint board more power is part of several amendments proposed to make TIFs more fair and transparent, said Steve Dembro, president of the District 69 school board.

“What we’re trying to do is get some reform in the process to make it more equitable for the people involved,” Dembro said. “We are not strictly saying we should never have TIFs. ... We’re not against every TIF in any condition.”

The Skokie district’s rationale in bringing the issue forward: “IASB must take a stronger position on the deleterious effects of TIF under the current law and actively advocate for reform or elimination of the current system.”

“The Committee determined that school districts face numerous challenges as it relates to TIFs, including the overuse of TIFs, the length of TIFs, and the fiscal impact of TIFs on taxpayers within the school district community,” according to the IASB Resolutions Committee’s analysis. “Given these challenges, taxing bodies most impacted by TIFs, such as school districts, should have a meaningful voice in the approval of a TIF and reform is needed.”

Geneva District 304 Superintendent Andrew Barrett said the assembly was advocating that the TIF legislation be reviewed and changed in several ways.

“And that included giving the joint review board more authority over those decisions,” Barrett said.

Geneva District 304 is one of the districts that has been forceful in its opposition to a TIF proposal.

In 2016, school officials opposed the Geneva Fox River Redevelopment Project Area, a 98-acre parcel. Officials said it would cost the district $7 million to $15 million over the 23 years of its life.

“Those are tax dollars that would be lost by the school district and would then need to be recouped on the backs of the rest of the other taxpayers – and not only Geneva, but Mill Creek, which has no vote in the TIF,” then-Superintendent Kent Mutchler said at the time.

Former 2nd Ward Alderperson Donald Cummings had countered that the city’s first TIF increased the equalized assessed valuation of the property. He had said at the time that the district ultimately received $4.2 million it otherwise would not have had, were it not for the TIF.

The city ultimately approved creation of the TIF, despite the district’s objection.

If a lawmaker is willing to advance a bill to give joint review boards more power, municipalities and government organizations would likely oppose them.

It’s certainly not something Sugar Grove Village Administrator Scott Koeppel would support.

“That would change the way TIFs are created in Illinois,” Koeppel said.

“As a village official, I would never be a proponent of the village board having less authority,” Koeppel said. “I would not recommend the villages lose their power to make decisions. Villages do not make these decisions lightly. Taking that power away from them (and giving it) to the joint review board – I think the elected village board makes the final decision.”

Sugar Grove recently discontinued a TIF district early because it was not producing projects like it was supposed to, he said.

Documents show the Sugar Grove TIF was created in 2012 and will terminate on Dec. 31, 2024.

The full IASB report is available online at www.iasb.com.