On February 13, the Geneva Board of Education approved talking points regarding the impact the City of Geneva’s newest Tax Increment Financing (TIF) District will have on the school district and on property taxes. See below.
GENEVA 304 TIF Q&A TALKING POINTS
(Approved at the Geneva CUSD 304 Board Meeting on 13 February 2017)
1) How does TIF work? ……… Properties within a TIF zone will have any increase in EAV and resultant taxes (including school and other property taxes) for a 23 year period diverted to a TIF fund managed by the city to be used for business development including developer incentives, city salaries, and other purposes.@
2) Will this impact the School District?.......Yes. Unlike the city, which has other sources of revenue, the schools rely on property taxes for 87% of their revenue. Thus, any tax revenue diverted by TIF will have an impact on school budgets and operations.
3) Will this affect our students education?...........Yes. The diversion of more than an estimated $7 Million to the TIF fund has the potential to negatively impact the schools financial resources which may result in budget constraints that eventually effect programs, students, teachers and classrooms.
4) Will TIF effect my property taxes?............ Yes. Taxes diverted to the TIF fund will not be used as originally intended and leave revenue shortfalls in the school, park and library budgets. Homeowners and other property owners will see increases to overcome any shortfall.
5) What did the School District do to try to work with the City and save tax payer dollars?.......
- Dec, 2015…School District informed about TIF at annual meeting on TIF 2 under
- an item simply listed as ‘New Business’ with no agenda reference to TIF 3
- Jan, 2016…School District requested detailed info and was sent incomplete files
- School District requested again & was told to file a FOIA to receive proper info
- Feb-June, 2016…School Board members attended several city council meetings to voice concerns
- April, 2016…Kane County Joint Review Board approved TIF over District concerns
- May,2016…School District held a public forum regarding TIF impact on residents
- May-July, 2016…School Board Members requested meetings with city officials to reach an equitable solution involving TIF properties, and city offered two meetings without resolving the issue, and then took the issue public for a council decision
- June, 2016…City discussed issue without a decision and said negotiations taking place, but there were no negotiations beyond the two initial meetings
- School District had proposed a compromise plan asking for EAV increase to be returned to the school district from some properties it deemed as not qualifying for the TIF
- July, 2016…City drafts their own proposal offering two properties to ‘split’ the difference. School District sends counteroffer, and then City rejected their own and the District’s offers, and approved TIF with no concessions to the School District
1) @For example, if the TIF begins in 2016, with the EAV for the aggregate property (based on the previous 3 year rolling average) was $18,000,000.00. If the school district’s tax rate is 5.5%, then the school districts portion of tax on this property in 2016 would be $330,000.00. If the aggregate EAV increases by 3% in 2017 with a constant tax rate of 5.5%, then the 2017 tax breakdown would result in $330,000.00 going to the district and $9,900 going into the TIF fund. Therefore, for the TIF recently implemented by the City of Geneva, If there were no new construction in the TIF District over 23 years and only a 3% annual increase in property value occurred, over $4.1M would be diverted from the school district to the City’s TIF fund.
Now, let’s take this process one step further. The intent of the TIF is to create property improvements within the TIF area that will significantly improve the value of the property within the district. If only the two major pieces of property in this TIF were to each increase 10 fold over their existing value, and if the increased EAV were to hit the tax rolls in year 5 of the TIF, with all other assumptions equal, over $7.2M could be diverted from the school district to the TIF fund over the life of the TIF. This is money that the school district will never be able to recover. To put this all into perspective, the average cost for a new teacher hired into Geneva CUSD #304 for salary and benefits for a single year is approximately $50,000.00.