Introducing the first in a 3-part series on an economic development tool the Village thinks might be able to jump-start downtown revitalization. What it is, why, and what’s in it for you.Get ready to geek-out - it will be worth it.
Winnetka’s 100-year-old infrastructure is becoming about as reliable as a teenager on prom night. And our broken-sidewalk-and heaving-brick downtown is forcing businesses, attracted by our mouthwatering demographic, to move on.
The Village thinks it’s found a “no-new taxes” way of giving you a downtown that “creates a framework that this community deserves and one that will better support the money we have invested in our homes…”[26:12]. But first, it must convince the Parks, Library, and School Boards to take one for the team.
Bad News is Good News
In 1997, the Illinois State Assembly passed the Tax Increment Financing (TIF) Act.
A gazillion words of govspeak that says towns like Winnetka can fund the renovation of underperforming or declining neighborhoods with the increased tax dollars that are expected to come from those improvements. If the neighborhood and the proposed reno projects qualify. Winnetka’s does.
The East and West Elm Business Districts have been going downhill for years. The Village’s to-do list passes muster.
Here’s how it works.
- A town’s neighborhood-in-need meets the TIF Act criteria, creates a “TIF District,” projects costs and revenues from those improvements.
- Taxing bodies hammer out “Intergovernmental Agreements” (IGAs) - outlining risks, rewards, and mutual responsibilities.
- Town establishes a Joint Review Board of stakeholders to keep an eye on the process and progress, gets residents’ buy-in.
- Town greenlights the ordinance that defines the scope of the renovation, and creates the “TIF Fund” that banks all new tax dollars from the improvements for as long as the TIF is in place.
Why TIF Now? Why Not Taxes or the Village’s Reserves?
- The Downtown Master Plan says it might cost $8MM-$10MM to bring the downtown up to speed. [26:12]
- The Village thinks with its measly 13% take home from your property tax dollars, it would take decades of more decline – and future Village Councils – before the projects are paid for.
- Stormwater has earmarked our reserves – and then some.
- Special service areas and yet another utility all mean new taxes.
- One Winnetka is expected to generate $33MM+ in new tax revenues over the next 23 years. The sooner the village TIFs, the greater the reward.
That Bird in the Hand Thing
True, the Village penned the One Winnetka deal. But because some of Winnetka’s other taxing bodies get a pretty sizable cut of your property taxes, they're looking at some pretty juicy returns. So sitting on their hands may be a big ask.
Maybe not, says the Village.
- Everybody gets every penny they’re entitled to now, and continues to get for the life of the TIF.
- When the TIF is retired - 23 years or sooner if the projects are paid off early [31:30] – all taxing bodies get their piece of a potentially bigger pie.
- IGAs customize risk/reward for each taxing body (i.e. if the new development causes a jump in student enrollments, the Schools can be reimbursed for their increased cost.)
- Then there are those tax benefits of "unrestricted funds"... [31:12].
Who’s In? Who's Out? Who’s Not Sure?
For now [1:56:00]
- District 36 – In the boat on a better downtown, but just got rid of $30MM in debt. We've got a to-do list of our own. TIF or taxes? Need help explaining to families.
- New Trier – Thanks for the help on our reno, but no quid pro quo. We’ve got constituencies – they’ve got needs. But glad to talk.
- Library – For now, just want to be at the table.
- Parks – For now, radio silence.
Those IGAs will be very interesting…
Checks and Balances
- Winnetka’s never done this before. But other nearby communities [think: Evanston, Highland Park, Deerfield, Skokie, Glenview and more] have been TIF’ing like crazy.
- If the Village can kumbaya, there’s plenty of paper on how to do it right.
- State limits how you can spend the money. Public improvements only. No funding private development.
- State limits spending to only the specific projects outlined in the TIF Fund. And only projects in the TIF District. How Winnetka might spend.
- Only certain costs are eligible.
- All taxing bodies continue to receive the base property tax revenues they get at the start of TIF [AKA, Baseline EAV]. Increased revenues end up in the TIF Fund. If the Village can kick-start the TIF before One Winnetka breaks ground, the upside is maxed.
- The TIF can close out early.
- Each taxing bodies cuts its own deal.
- The TIF ordinance can’t be changed without going through the whole process all over again.
Next up: Controversy, Questions and Answers. For now…
- What is TIF and how does it work?
- The TIF Act
- Ehler’s Feasibility Study
- Ehler’s Redevelopment Plan
- Neighbors who TIF
- How we got here
October 10th Village Study Session - Know what they know. President explains, Ehler's presents [33.25], Trustees discuss [53:00].
Contact the Trustee of your choice with your questions, comments, concerns, insights.