Council Votes to Implement Two TIFs

The Marengo City Council voted to implement two Tax Increment Financing Districts (TIFs) in Marengo at the city council meeting on March 14, 2011 in city hall.

Don Lockhart, Mayor of Marengo, said the Downtown TIF qualifies as a "Conservation Area" and the Eastern Corridor TIF qualifies as a "Blighted and Conservation Area." To qualify as a conservation area, by law, three of 13 criteria must be met in order to be eligible for a TIF district; and seven of the 13 criteria are met by the Downtown TIF, Lockhart said. For the Eastern Corridor TIF, "five of 13 criteria must be met and this area meets eight; for vacant land, two of six criteria must be met, this area meets four of those six," he said.

"Some other things I have heard about TIFs [are that they] can annex property without consulting the school district—this is not true," Lockhart said. "The fact is that the city can annex land into the City of Marengo without consulting the school district. However, land cannot be added to a TIF district without going through the TIF implementation process which would include the school districts’ review. Furthermore, the city has also committed to not pursue any new TIF districts on land currently within the city for the duration of the two new TIFs and the one existing TIF."

A TIF that lasts 23 years, but can be extended to 35 years without the input or agreement from the taxing bodies is not entirely true, Lockhart said.

"To extend a TIF beyond 23 years, the city would have to go through a very similar process that we are going through now, which would of course involve the input of all local taxing bodies," he said. "Additionally, to this point, the city has committed to not extend any of these TIFs beyond 23 years, which was part of the proposal offered to the other taxing bodies at one of the many joint review board meetings."

Lockhart said if nothing happens within seven years, the "TIF goes away, anyway."

Lea Damisch, Superintendent of Marengo-Union Elementary School District #165, said she is most disappointed by the lack of community awareness on the TIF issue.

"The TIFs have a 23-year impact on the taxpayers," Damisch said. "As a public official, I believe in transparency. The average man on the street has no ideas that this just happened in their community."

Damisch said the, "other disappointing issue is the lack of understanding by the city council as to how schools are funded."

"I was taken aback by the mayor’s comment that it would be great for our schools to be deemed ‘poor’ because we would receive more money from the state," she said. "I am not sure how I can even respond to that thought process. Being a poor school and depending on state money [would] be better than to have viable businesses who share in the financial support of the local governments, including schools?"

Damisch said at the end of March 2011, the state owed the district over $450,000.

"I cannot believe that there is no plan as to the total cost of this expansion and improvements of downtown," she said. "The city should be required to quantify the costs, present it to the community, take it to a vote, and the outcome of that vote should determine the direction of the city."

Lockhart said the city is required, by law, that if any students are located within a TIF district, to provide the TIF funds to schools to support that student. He said the amount eligible for reimbursement depends on the type of school district and is normally the out-of-district tuition.

"It is the school district’s responsibility to provide evidence to support its claim for reimbursement each year," Lockhart said. "We have seen studies provided by the school districts that suggest that areas with TIFs grow at a slower rate than those without TIFs. Those in the academic world will tell you that for every anti-TIF article, you can find just as many that are pro-TIF. There are studies that have concluded that school districts with TIF only experienced slow growth if a large portion of the taxes were tied up in TIF. That same study also concluded that school districts with a TIF experienced faster growth in state aid than those without TIF."

Dr. Dan Bertrand, Superintendent of Marengo Community High School District #154, said the district is disappointed in the City of Marengo’s decision to proceed with creating the two TIF districts in the community.

"The district has repeatedly expressed its concern about losing potential new property tax dollars in areas which the district believes will grow with or without a TIF-- especially in these difficult times when the school district is deficit spending by nearly $500,000 per year," Bertrand said. "The loss of revenues will have an impact on the school district and will, at some point in the future, result in the school district returning to the voters for a tax increase sooner than it would have had to if it were not for the TIFs."

Lockhart said that while the Equalized Assessed Value (EAV) within the TIFs are frozen, schools do not lose full EAV advantage because the general state aid reimbursement calculation for schools is based on the frozen assessment.

"[This means] any newly-created EAV within the TIF would not be counted against the district for determining state aid," he said. "…Assuming the amount of state aid to the school [districts] will increase once a TIF district is in place, the city, as all other taxing bodies should, will continue to push for legislation guaranteeing local taxing bodies receive prompt payments from the State of Illinois."

Lockhart said the school district, like the city and other taxing bodies in Marengo, are all subject to a tax cap. This means if a district would like to raise taxes more than the allowable annual adjustment (the lesser of the CPI or 5%), a referendum is required, he said.

"The school districts have said ‘with or without a TIF, there won’t be growth for a long period of time,’" Lockhart said. "I personally do not believe that statement to be true."

Jerry Trickett, Superintendent of Riley School District #18, said he was not surprised by the outcome of the city’s decision for the TIF districts.

"The mayor and the city council did what they felt to be the best for the community of Marengo by passing the two TIFs," Trickett said. "The fact that everyone had a chance to give input regarding their own agencies and the public was appreciated. Each taxing body has to be responsible to their constituents. I did support the efforts of School Districts #165 and #154 to try to reach an acceptable agreement with the city, but [was] not surprised by the outcome. I felt personally that the downtown TIF met the ‘but for’ provisions of eligibility, but did not feel the criteria was evidential for the Eastern Corridor [TIF]. In my opinion, tax dollars should not go to fund development for private or corporate business in these economic times."

Lockhart said with or without a hotel, the Eastern Corridor TIF "will be moving forward." He said with or without a hotel coming to Marengo, the TIFs are the right move for the city.

"I believe these TIFs to be in the best interest of the City of Marengo," Lockhart said. "Due to the recent income and corporate tax increases from the State of Illinois, it is now more difficult than ever to attract new businesses to Illinois. The city must use all available resources, including TIFs, to bring sorely-needed commercial development to Marengo and give taxpayers relief."