TIFs

[Ted]

I spent the day doing some research on TIF districts and their affects on school districts.  I looked specifically at District 201.

  First, the most surprising thing I found is that the area in McCook west of First Avenue that is part of District 201 is a TIF district. I didn't realize that.

Here is a link to the maps of the TIF districts:

http://www.cookcountyclerk.com/aboutus/map_room/Documents/TIF/TIF_Lyons_ty2009.pdf

http://www.cookcountyclerk.com/aboutus/map_room/Documents/TIF/TIF_Berwyn_Cicero_OakPark_ty2009.pdf 
 
Second, I found that property tax revenue would increase by 9.25% if TIF districts did not exist. D201 EAV would increase from $2,267,964,034 to $2,478,541,420.  The district would collect an additional $3.875 million in property taxes if there were no TIF districts.

  If TIF districts were eliminated, the percentage of property taxes paid by each township would still remain roughly the same.  Stickney's percentage would drop 1% from 8 % to 7% (Stickney does not have any TIF districts) and Cicero's percentage would increase from 40% to 41%.  Berwyn would still be 40% and Lyons Township would still be 12%.

[Ted]

  Here are the numbers for D100 and D98 if no TIF districts existed:

D98:

 EAV would increase from $343,142,102 to $362,370,622. Property tax revenue would increase by $540,931 from $9,653,183 to $10,194,114.65 - a 5.6% increase in revenue.

D100:

 EAV would increase from $572,349,787 to $612,431,356. Property tax revenue would increase by $998,709.75 from $14,261,201 to  $15,259,910 - a 7% increase in revenue.

D201:

 EAV would increase from $2,267,964,034 to $2,478,541,420. Property tax revenue would increase by $3,874,627
from $41,902,321 to $45,776,948 - a 9.25% increase in revenue.


Overall:

 If you look at the overall effect of TIF districts on our schools, our school districts last year lost $5.4 million dollars in property tax revenue from TIF districts - a loss of 8.45% in property tax revenue.
 

[dukesdad]

TIFs also affect the park districts.

[OakParkSpartan]

Are you able to calculate the expected effect if Cermak Plaza were moved into a TIF (or was it already, I don't recall).

[Ted]

Are you able to calculate the expected effect if Cermak Plaza were moved into a TIF (or was it already, I don't recall).

I made the assumption that half of Cermak Road would go to D98 and half of Cermak Road would go to D100.

D98:

1. Regular property tax revenue increases from $7,399,489 to $7,649,473, about a $250,000 increase (3.4% increase)

2. Bond Interest property tax revenue would change from $2,253,694 to $2,329,833, about a $75,000 change (again 3.4%). I believe this would result in a decrease in people's property taxes, (I think), because of the way bond interest property tax works. If there are 9,000 households in north Berwyn, this would be a decrease in their tax bill for D98 of an average of $8.33


D100:

1. Regular property tax revenue increases from $11,658,190 to $11,894,322, about a $236,000 increase. This is a 2.025% increase in revenue from property taxes. (FYI, the tax rate is lower in D100 than in D98, so the amount is lower).

2. Bond property tax would change from $2,603,011 to $2,655,734, about a $52,000 change. If there are 15,000 households in south Berwyn, this would be a decrease in their tax bill for D100 of an average of $3.50.


D201:

1. Regular property tax revenue increases from $32,063,671 to $32,391,458, about a $328,000 increase in property tax revenue. This is a 1.022% increase.

2. Bond interest property tax would change from $9,838,650 to $9,939,231, a change of about $100,000. If there are around 60,000 households in D201 (I am not sure of that number), this would be a decrease in the property tax people pay into D201 by around $1.66.

 Please note, the end of the Cermak TIF actually decreases the property tax bill for people in Cicero, Stickney and Lyons because of the way Bond Interest property tax works (I think).

[watcher]

 Here are the numbers for D100 and D98 if no TIF districts existed:

D98:

 EAV would increase from $343,142,102 to $362,370,622. Property tax revenue would increase by $540,931 from $9,653,183 to $10,194,114.65 - a 5.6% increase in revenue.

D100:

 EAV would increase from $572,349,787 to $612,431,356. Property tax revenue would increase by $998,709.75 from $14,261,201 to  $15,259,910 - a 7% increase in revenue.

D201:

 EAV would increase from $2,267,964,034 to $2,478,541,420. Property tax revenue would increase by $3,874,627
from $41,902,321 to $45,776,948 - a 9.25% increase in revenue.


Overall:

 If you look at the overall effect of TIF districts on our schools, our school districts last year lost $5.4 million dollars in property tax revenue from TIF districts - a loss of 8.45% in property tax revenue.
 

The other side of the TIF should be equally documented. The monies that didn't go to schools, parks, county, township, but instead pooled for TIF use were presented as unrealized dollars that would not have been available without the improvements financed by the TIF money.

At least that was the theory. What was the practice? The outcome? Has the TIF process changed/improved over time or is still being done as it always has been? I know advocates are quick to cite increases in value, but how do those increases outpace those of non-TIF property? Have there been good and bad TIFs? What's the ratio? Has it been the win-win upon which it was "sold"?

By now, there should be some measurable data? By now, at least some of the early TIF districts should be coming fully back onto the tax rolls. I've not seen any banner headlines lauding their feats.

There are also levies and tax rates and other influences that make it difficult to express the TIF equation in absolute revenue terms. Adding value to the EAV spreads the proportional share of individual P.I.N. of the levy across a broader spectrum. A large jump in EAV remains unrealized due to tax rate limits and caps. Taxing bodies CAN recalculate in succeeding years and maximize/optimize their bite, but
for the most part that remains upper level math that stays behind the curve. IOW, The budget/levy process lags behind increases in EAV until the pencils are really sharpened.

At present, we're experiencing the opposite. EAV should be dropping to reflect the bubble losses. As yet, there's been only spotty attempts to adjust to the lowered values. That was exacerbated further by the legislature's multiplier, the increased demands on resources, slow to react budget cutting and properties in foreclosure.

It would make fiscal sense to re-evaluate the practicality of TIF districts and take steps to curb their widespread use. A moratorium while
an objective appraisal of cost/benefits is conducted?

[Ted]

 Let me emphasize that the numbers above are for a single year - not the entire life of the TIF.

[Ted]

By now, there should be some measurable data? By now, at least some of the early TIF districts should be coming fully back onto the tax rolls. I've not seen any banner headlines lauding their feats.

The Cermak Road TIF is coming back on the tax rolls this year (which is why OPS asked about it, I think) and the Depot District TIF is coming back on the tax rolls next year.

  But... the city of Berwyn is essentially re-instituting part of the Cermak Road TIF as a new TIF this year.

[OakParkSpartan]

Watcher, drive down Cermak, and see if you can spot the millions of dollars the TIF took in...I'd say the return on investment was pretty low.

[watcher]

Watcher, drive down Cermak, and see if you can spot the millions of dollars the TIF took in...I'd say the return on investment was pretty low.

Gee Dad, do I have to? <whine mode off>

I read Ben Joravsky. I even comprehend much of it. That is, until I get to the accounting and accountability explanations.
When scathing IG reports are brushed aside, on TIFs that are somewhat monitored, I don't expect much as I delve into
lesser practitioners of the craft residing in the burbs.

I sort of gave up asking questions, locally, when the response was "It's all legal." (and the legal fees charged to the TIF certainly support that assertion.). What I've seen recently is the 'monkey see; monkey do' approach to TIF tapping. When one municipality comes up with a new and novel way to allocate TIF funds, you can bet the dominoes will begin falling elsewhere. Because it's TIF money, controlling costs isn't the focus. It's McMoney. It's application limited only by one's audacity and the cleverness of the attorneys.

Value received or the impact on lesser taxing bodies are barely acknowledged. Thar's gold in TIFs.

[n01_important]

 Here are the numbers for D100 and D98 if no TIF districts existed:

D98:

 EAV would increase from $343,142,102 to $362,370,622. Property tax revenue would increase by $540,931 from $9,653,183 to $10,194,114.65 - a 5.6% increase in revenue.

D100:

 EAV would increase from $572,349,787 to $612,431,356. Property tax revenue would increase by $998,709.75 from $14,261,201 to  $15,259,910 - a 7% increase in revenue.

D201:

 EAV would increase from $2,267,964,034 to $2,478,541,420. Property tax revenue would increase by $3,874,627
from $41,902,321 to $45,776,948 - a 9.25% increase in revenue.


Overall:

 If you look at the overall effect of TIF districts on our schools, our school districts last year lost $5.4 million dollars in property tax revenue from TIF districts - a loss of 8.45% in property tax revenue.
 

The other side of the TIF should be equally documented. The monies that didn't go to schools, parks, county, township, but instead pooled for TIF use were presented as unrealized dollars that would not have been available without the improvements financed by the TIF money.

At least that was the theory. What was the practice? The outcome? Has the TIF process changed/improved over time or is still being done as it always has been? I know advocates are quick to cite increases in value, but how do those increases outpace those of non-TIF property? Have there been good and bad TIFs? What's the ratio? Has it been the win-win upon which it was "sold"?

By now, there should be some measurable data? By now, at least some of the early TIF districts should be coming fully back onto the tax rolls. I've not seen any banner headlines lauding their feats.

There are also levies and tax rates and other influences that make it difficult to express the TIF equation in absolute revenue terms. Adding value to the EAV spreads the proportional share of individual P.I.N. of the levy across a broader spectrum. A large jump in EAV remains unrealized due to tax rate limits and caps. Taxing bodies CAN recalculate in succeeding years and maximize/optimize their bite, but
for the most part that remains upper level math that stays behind the curve. IOW, The budget/levy process lags behind increases in EAV until the pencils are really sharpened.

At present, we're experiencing the opposite. EAV should be dropping to reflect the bubble losses. As yet, there's been only spotty attempts to adjust to the lowered values. That was exacerbated further by the legislature's multiplier, the increased demands on resources, slow to react budget cutting and properties in foreclosure.

It would make fiscal sense to re-evaluate the practicality of TIF districts and take steps to curb their widespread use. A moratorium while
an objective appraisal of cost/benefits is conducted?

A few of us having been asking for that... we have enough data to show what value did the Cermak TIF bring in it's 10 years? 

[Homebody]

By now, there should be some measurable data? By now, at least some of the early TIF districts should be coming fully back onto the tax rolls. I've not seen any banner headlines lauding their feats.

The Cermak Road TIF is coming back on the tax rolls this year (which is why OPS asked about it, I think) and the Depot District TIF is coming back on the tax rolls next year.

  But... the city of Berwyn is essentially re-instituting part of the Cermak Road TIF as a new TIF this year.

The new TIF may not happen this year. The City held a public presentation of the new TIF being planned. The meeting was a few months ago. There were about twelve of us at the meeting. I asked why the planners would not wait until after the next assessment. Our EAVs will certainly go down. Freezing the tax rate in the area at the lower EAV would allow capture of more tax increment as our home values increase (hopefully) as the economy recovers.

[Homebody]

Ted, thanks for doing this research. I would like to sit down with you to discuss TIFs in detail. It is correct that all Berwyn's current TIFs are almost expired. They were all created for a maximum 23 years. Remember that taxes are collected a year behind. So, TIF $ can be captured in the year immediately following the expiration.

I think that Tony Griffin and the current BDC team has worked hard over the last 6 years to attract business to Berwyn. We are going to see results of years of effort this summer. I don't think we have much to show for the TIFs in either of the districts over the first 17 years.

I am being told that due to the development deal on the NE Harlem/Cermak corner, adjacent blocks east and south of that intersection are attracting interest from retailers/chains/etc. This would be the areas planned for the new TIF. We have an agressive business development team in place now. Here are my questions:

1. Do we make the TIF and try to capture the business while the corner is hot? Know that the City will have to throw money at any business coming in whether it is TIF $ or something else. Either way, it will still be our dollars going to attract the businesses.

2. What if we limited the TIF to 12 yrs rather than the traditional 23? If the area is at last "hot" couldn't the area be developed in half the time?

3. I know that I have never lost a good neighbor because Berwyn didn't have a Starbucks. My neighbors (with cildren) have moved because of Morton HS. A strong D201 would be a better attraction to a potential home buyer. Given the current political make up of D201, would an infusion of $ provided after the expiration of Berwyn TIFs make enough of a difference in the next twelve years?

Thanks for helping me answer these questions. Marge Paul

[OakParkSpartan]

Schools, especially Morton, but also D98 and 100, are what as viewed as the weakest part of Berwyn.  I'm not certain how diverting funding from schools to TIF districts ends up being in our long term interest?  Based upon the performance shown over the last 20+ years, I wonder if investing in the elementary schools would not have been a better use of that money.

If the schools levy a particular amount, won't that mean the tax burden is shifted from the TIF district to the residents?  Given the incessant tax increase by the city, I'm not sure that poor schools + high taxes + under-performing business districts = long term success.  I'd argue that it does not.

[watcher]

1. Do we make the TIF and try to capture the business while the corner is hot? Know that the City will have to throw money at any business coming in whether it is TIF $ or something else. Either way, it will still be our dollars going to attract the businesses.

2. What if we limited the TIF to 12 yrs rather than the traditional 23? If the area is at last "hot" couldn't the area be developed in half the time?

3. I know that I have never lost a good neighbor because Berwyn didn't have a Starbucks. My neighbors (with cildren) have moved because of Morton HS. A strong D201 would be a better attraction to a potential home buyer. Given the current political make up of D201, would an infusion of $ provided after the expiration of Berwyn TIFs make enough of a difference in the next twelve years?

Thanks for helping me answer these questions. Marge Paul

1) Is "throwing money at business"  really good business? Is it in the long-term best interest of Berwyn? Who decided this?
I know "everybody's doing it", but you know the old saying? Sure, every parent does. "If you give a mouse a cookie"
That said, there are absolutely some mutually beneficial agreements that can be negotiated for identified community NEEDS, but
that's not "throwing money", that's planting seed.
There are tons of established community resources that are better suited to work with development issues. SBA? DOT?
There are NGOs and NPOs whose focus is helping well-positioned communities maximize their potentials. If livable, sustainable community is the goal and control issues can be attenuated, finding partnerships that don't require "throwing money at it" will always outperform in the long run.

2) Don't create TIF districts because you can. It's not the only tool in the box and sometimes (more and more often) sends up a red flag to potential businesses who just don't want to play those games. There are enough corps and small businesses who are also interested in long-term sustainability to not automatically think TIF is the only answer.

3) Somebody needs to identify and quantify the problem. Otherwise there is only the continued downward spiral. I suspect the problem is one of abandonment rather than anything within MW's building. It's the students who are NOT going who could "solve" the problem. By and large this will typically be the AVERAGE students. The vast middle who aren't suited for private schools. The elementary students (and parents) who've been hearing for years how horrific life at Morton WILL be.
Anecdotally, many average students do just fine at MW, but those skills would be transferable wherever they go and for most parents, their child deserves whatever advantage they can possibly provide.

The key is to know that MW has something that belongs to Berwyn's high school age students. Students have to be empowered to go and get it from them. Strong successive cohorts progressing through K-8 and moving into THEIR high school would almost immediately redefine
MW. A 50% attrition rate will never get it done.

Beyond quantifying that rate, the specific missing students need to be identified. If it is, as I suspect, the average students who aren't there anymore, it would explain the inability to raise test scores. You're left with a top and bottom with no buoyancy.

Until ALL of the responsible parties (98, 100, 201, CoB,)  choose to identify and FIX this, the decline will continue. They can't be allowed to shun responsibility because they are only PART of the problem. They need to be grown-ups and work together at a solution. In short, they need to LEAD.

[Kai]

Schools, especially Morton, but also D98 and 100, are what as viewed as the weakest part of Berwyn.  I'm not certain how diverting funding from schools to TIF districts ends up being in our long term interest?  Based upon the performance shown over the last 20+ years, I wonder if investing in the elementary schools would not have been a better use of that money.

If the schools levy a particular amount, won't that mean the tax burden is shifted from the TIF district to the residents?  Given the incessant tax increase by the city, I'm not sure that poor schools + high taxes + under-performing business districts = long term success.  I'd argue that it does not.

While I agree with your sentiments re: TIFs, I must disagree with the sentiment that Morton is "the weakest part of Berwyn". I've heard this sentiment over and over again for the past 10 years of my employment with this district. It is disheartening, defeatist, and profoundly hurtful to those of us who are doing our very best with the limited resources we get.

[Ted]

...   I must disagree with the sentiment that Morton is "the weakest part of Berwyn". I've heard this sentiment over and over again for the past 10 years of my employment with this district. It is disheartening, defeatist, and profoundly hurtful to those of us who are doing our very best with the limited resources we get.

 But, it's the truth.  I've lived here for over 25 years and have seen many neighbors move in and then move out. I have seen one of my cousins who loved his bungalow move out as well - all for the same reasons - the schools. When their kids reach high school age especially, people consider moving or sending their kids to a private high school.

 It's been that way for a long long time.  

[Ted]

2) Don't create TIF districts because you can. It's not the only tool in the box and sometimes (more and more often) sends up a red flag to potential businesses who just don't want to play those games. There are enough corps and small businesses who are also interested in long-term sustainability to not automatically think TIF is the only answer.

 In researching the D201 TIF districts, I found out that the Lyon's quarry (on Frist avenue) is its own TIF district.

Why?  Why on earth would they make the quarry a TIF district?  There are no buildings there and there can never be any buildings there.  So, why make it a TIF district?

 Also, speaking of EAV, the Lyons quarry was the one TIF district where the EAV decreased from the point it was frozen at.

 What does that mean in terms of property taxes?  Does D201 get the frozen EAV?  Or does it get the decreased EAV to calculate property taxes?

 I didn't understand the Lyons quarry TIF district at all. It made no sense.

[OakParkSpartan]

Schools, especially Morton, but also D98 and 100, are what as viewed as the weakest part of Berwyn.  I'm not certain how diverting funding from schools to TIF districts ends up being in our long term interest?  Based upon the performance shown over the last 20+ years, I wonder if investing in the elementary schools would not have been a better use of that money.

If the schools levy a particular amount, won't that mean the tax burden is shifted from the TIF district to the residents?  Given the incessant tax increase by the city, I'm not sure that poor schools + high taxes + under-performing business districts = long term success.  I'd argue that it does not.

While I agree with your sentiments re: TIFs, I must disagree with the sentiment that Morton is "the weakest part of Berwyn". I've heard this sentiment over and over again for the past 10 years of my employment with this district. It is disheartening, defeatist, and profoundly hurtful to those of us who are doing our very best with the limited resources we get.

So we should say it is the pride and joy of Berwyn?  Look at the test scores.  Look at the graduation rate.  Something is broken.

In order to fix a problem, you need to acknowledge the problem exists.

I don't know if you live here, but I hear over and over from parents that they will likely be selling when their kids reach high school age.

[n01_important]

...
2) Don't create TIF districts because you can. It's not the only tool in the box and sometimes (more and more often) sends up a red flag to potential businesses who just don't want to play those games. There are enough corps and small businesses who are also interested in long-term sustainability to not automatically think TIF is the only answer.
...

Berwyn's answer to development seems to be a hammer thinking that everything out there is a nail.