What is Tax Increment Financing (TIF)?
Tax Increment Financing is an economic development incentive program that was originally designed to spur development in depressed, run down areas where private investment was unlikely to happen without special incentives.
How does TIF work?
A TIF allocates future increases in property taxes from a designated area, or TIF district, to pay for improvements in that area. When a TIF district is created, a base Equalized Assessed Value (EAV) is set. Any increases in EAV as a result of new development, rehabilitation, or property appreciation are allocated to the City for re-investment in the TIF district. Taxing bodies receive taxes only on the base EAV for a period of 23 years.
Why is the school district opposed to TIF District 3?
A TIF diverts any increases in property taxes within the TIF district away from taxing bodies such as schools for a period of 23 years. This would freeze tax payments to Geneva schools at the TIF base level for the next 23 years. Even when costs go up due to inflation, the district will still only receive taxes on the base EAV. This means schools will be deprived of the natural market increases on EAV, funds that schools need to operate effectively. Diverting tax dollars away from schools to pay for economic development is counter intuitive because quality schools are a huge driver of economic growth in any municipality.
Will the TIF district affect my taxes?
The TIF itself is not a new tax. However, TIFs siphon money away from other taxing bodies (school district, library district, park district, etc.) for a period of at least 23 years. If these bodies are not receiving sufficient tax dollars to continue to provide the level of service expected by the public, they could be forced to increase their tax levies to compensate. This could result in increased property taxes. Residents of the school district outside of the TIF district (including taxpayers in the Mill Creek subdivision) would bear the burden of paying for any increased school district levies over the life of the TIF district. The tax increases within the TIF district will be included in the increment that is paid to the TIF fund and used to pay the eligible development expenses within the TIF district.
What can I do?
If you are concerned about the impact TIF District 3 would have on Geneva schools or your bottom line, please spread the word to as many people as you can. You can also:
What does the school district hope to achieve?
- Talk to or write to your alderman about your concerns
- Attend the Geneva School Board’s public forum on May 3 to learn more about the TIF and how it could affect schools and you personally
- Attend the City Council meeting on May 16 and ask the Council to delay taking action on the proposed TIF until they have collaborated with the school district and other taxing bodies
The school district believes TIF can play an important role in economic development in areas that are truly blighted or at risk of becoming blighted. The school district is willing to collaborate with the City and other taxing bodies to develop a TIF that meets the eligibility requirements and that brings economic development to Geneva without harming its schools and other public service providers.
Per the school district's attorney and TIF consultant, TIF District 3 includes many parcels that don’t fit eligibility requirements. The school district intends to show that the City has overstated several of the eligibility requirements and that it has not satisfied the “but for” test, meaning it has not proved that the TIF area would not reasonably be anticipated to be redeveloped without TIF.
Many of the parcels included in the TIF have been subject to growth and development through private investment. For example:
• Malone’s Funeral Home
• Covenant Retirement Home
• Doerner Jewelers building
• Warlick Law Office building
• Konicek & Dillon Law Offices
• Mill Race Cyclery
• School of Rock
• Shodeen Purchase of Mill Race Inn property
• Shodeen Contract to purchase Geneva Cycle parcel
These examples show that private investment is occurring in the area without the need for TIF. The school district is eager to collaborate with the City to find alternative ways to spur economic development in our growing and vibrant community.