Monday, January 26, 2009

TIF District Follow-Up

The work session tonight did not shed much additional light on the proposed TIF district.  The Mayor introduced the idea of TIF districts by saying that he has seen them used by surrounding communities and that there are consultants who are willing to meet with the city without charge to discuss the matter.  No indication was given of what areas were being considered for inclusion in a TIF district.  A work session is planned for next month when consultants will come and discuss TIF districts in greater detail.  The superintendents of both elementary school districts were invited to tonight's meeting and have asked to continue to be involved in all discussions.  This is an important step since TIF districts can have significant impacts upon the schools.  One citizen stood up to voice his opposition to TIF districts that are used improperly because of the tax impacts that they can have on the rest of the city.  This was a very healthy start to the discussions of a TIF district even if no specifics were offered.  I hope that the Council keeps the schools as well as the citizens involved and do not just listen to the consultants who have a financial interest in creating TIF districts.  As more information becomes available, I will share it as well as giving my analysis of any proposals.

Sunday, January 25, 2009

TIF District Under Consideration

The City Council will be discussing Tax Increment Financing (TIF) districts at tonight's work session.  TIF districts are a tool that has been used by cities to promote economic development of depressed areas.  Such districts are not without controversy though because the benefits they provide come at a cost to other areas and taxing bodies.

A TIF district is a defined area encompassing all the properties within the boundaries that are created for it.  The amount of property taxes received by each of the taxing bodies is frozen for 23 years.  Over those years as the property values increase, the taxes paid also increase; but the increased amount is paid to the city and goes to a designated TIF fund.  That increased amount is the tax increment.  This money is then used to pay for improvements within the TIF district that are meant to attract new development to the TIF district.  These improvements can be anything from streetscaping to parking garages to even providing incentives directly to businesses.  The funds are not supposed to pay for ordinary operating expenses such as filling potholes, plowing streets, or providing police protection.  The area encompassed within a TIF district are meant to be properties that are currently blighted and are not reasonably expected to be able to be improved otherwise.

Many cities have used TIF districts to create new economic development and have seen them as very useful tools.  They feel that without the TIF districts redevelopment of blighted areas would not have been possible.  TIF districts are able to provide large amounts of money for redevelopment especially in cases where the improvements are put in early on using borrowed money and then paid back over the 23 years as the increased tax increment dollars are collected.  This of course exposes the city to the risk that the increase is not sufficient to pay back the debt.

TIF districts are opposed by some because of the effect they can have on other taxing bodies, their long life, and their misuse in some cities.  The amount that other taxing bodies receive in property taxes from a TIF district are frozen for 23 years.  The reasoning behind this is that these are blighted properties that would not otherwise have increased in value if not for the improvements.  However, this is a false notion because one would be hard pressed to find any property in this area, even the most blighted, that is today paying less in taxes than they were in 1986.  A rising tide lifts all boats.  This means that the schools, parks, and fire districts are losing out on revenue they otherwise would have collected even if no new development had happened. 

TIF districts can also create new costs for other taxing bodies that did not previously exist.  If a TIF district is developed to include condos and other residential uses in an area that previously had none there are no more students to be educated, but no additional funds to pay for that education.  The rest of the taxpayers outside of the TIF district would have to pick up that cost.  The same would be true of increased need for policing if the TIF contained additional commercial uses such as bars, restaurants, and shopping.  Many proponents of TIF districts claim that they do not increase anyone's taxes.  However, the additional costs created that cannot be paid using TIF funds must be paid for by someone and that someone will be all the taxpayers outside of the TIF district.

The third concern raised is the misuse of TIF districts.  They are meant for blighted and depressed areas that would not otherwise be able to be redeveloped into a higher, better use.  There are certainly cities that have found areas that this applies to.  However, others have taken areas that are already improving and used TIF districts to speed the process along or to be able to provide even greater economic incentives to developers.  TIF districts were not meant to be used as a common economic development tool in all situations, they are instead meant for specific circumstances.  This is a concern because of the costs that TIF districts can impose upon other taxing bodies and on the taxpayers.  That cost may be worthwhile if it leads to development that would not otherwise be possible, but it would be a high price to pay for development that could have been brought about by other means.

I have been involved in the creation and administration of TIF districts in other cities and have seen the potential benefits they offer as well as the problems they create.  Before the city creates on, it is important that we all are educated and informed.  This means that we need to know exactly what properties will be included, what the money will be spent on, if financial incentives are being given to businesses, and what the impact on the schools and other taxing bodies will be.  Following tonight's work session, I will post details of what is being proposed by the city as well as my own analysis of the information presented.

Monday, January 5, 2009

Mayoral Ethics, Part II

A few months ago it was revealed that the Committee to Re-Elect Mayor Nick Churnovic had accepted donations from two engineering firms that were actively seeking to do business with the City at that time.  A portion of the City Council at that time spoke out against his actions and publicly stated that they did not want to see pay-to-play politics become the way Crest Hill is run.  

Well, the Mayor has now reaffirmed his belief that pay-to-play is the means by which he is governing the City of Crest Hill.  His re-election committee has accepted money from Allied Waste.  This is the same company that is looking to get a five year garbage services contract from the City without bidding.  Mayor Churnovic expressed his strong support that the Council not go out for bid but instead consider only proposals from Allied Waste.  The reason for this is now very clear.

Apparently, there is no need to bid for contracts with the City if you contribute to the Mayor's re-election campaign.  This is a clear abuse of his office as Mayor and a betrayal of the public trust.  How many other instances are there of the Mayor accepting donations from those either doing business with or seeking to do business with the City?  After seeing how the State has been hurt by this type of corruption, do we really want this for Crest Hill?  

The time has come to demand better from our politicians.  We do not need a Mayor who trades city contracts for campaign contributions any more than we need a Governor who sells a Senate seat for campaign contributions.  Why would we want the shame of pay-to-play politics on a local level?  The Mayor has shown repeatedly that he desires to run the city in this manner though.  The voters need to send a clear message come April by voting to replace the Mayor and any other official that supports his way of running this city.