TIF Districts Benefit Area Municipalities

While the Glen Ellyn leaders move forward in establishing a Tax Increment Finance (TIF) district in the downtown business area, other area municipalities tout success of their districts.

A TIF district is often used to spur development and to generate funds to use in public projects, which otherwise would be too expensive to do, by borrowing against future tax revenues.

In November 2010 the Village Board commissioned a feasibility study for the creation of a TIF district to spur economic development. a downtown TIF District will generate between $16.5 million and $34.5 million in revenue for the improvement in the Central Business District. The village has been looking at a strategic plan to revitalize the downtown area since 2009. The downtown area includes a number of historic buildings as well as more recent developments. However, many of the downtown buildings zoned for business are empty, and village residents and merchants have expressed their concern about the empty buildings to the Village Board.

Larry Noller, acting finance director for the village, said some of the projects outlined in the 2009 plan include possible infrastructure upgrades, new public parking areas and partnering with a private developer for a multiuse structure.

TIF districts have been successfully used in surrounding villages to change the aesthetic and economic landscape of downtown areas. One of the most successful TIFs was used in La Grange to turn a desolate downtown into a thriving economic engine. But that transformation did not happen overnight. It took more than a dozen years before village leaders began to see the first big developments, said Lou Cipparrone, finance director for La Grange.

“We are really pleased with what the TIF district did for La Grange, but it was something that took time to happen,” Cipparrone said.

La Grange’s TIF district ended in December 2009. TIF districts have a life of 23 years, according to state statutes. Cipparrone and Patrick Benkamin, community development director of La Grange, said the TIF district was a tremendous success. When the district first began in 1986, the downtown area was generating approximately $50,000 in annual property taxes. By the time it ended in 2009, the village was seeing $3 million in annual property taxes from the district.

“Before the TIF district started, you could throw a bowling ball down LaGrange Road and not hit anything,” Benjamin said.

Cipparone said it wasn’t just the downtown area that benefited, business grew in other areas of the village because of the success in the TIF district. He said the revenue growth positively impacted the village, the park district and the school district.

Not only did the TIF provide an engine for economic success in La Grange, it also spurred an increase in population through new multiuse housing developments.

Adn, there are the intangibles. Cipparone said the TIF made it possible to beautify the landscape of downtown with new building facades, brick sidewalks, planters and benches. Funds generated by the TIF also allowed village leaders to build a downtown parking garage, something Glen Ellyn leaders want to see as well. Cipparone said the addition of those items did not in themselves generate any positive revenue, but it helped to create an environment friendly to businesses and shoppers.

“People want to come to the downtown and spend time. All of this happened in large part because of the TIF district,” Cipparone said.

The same holds true for the city of Wheaton, which has three TIF districts. Jim Kozik, director of planning and economic development for Wheaton, said TIFs helped reshape their downtown and provided funds for two parking garages. TIF funding also provided aesthetic changes and spurred new business investment, he said.

“It’s a great financing method from our standpoint, but there are some controversies because it freezes assessed (tax) values when it’s set, which means the school district and park district and municipality only receive real estate taxes based on frozen value,” Kozik said.

Approval of a TIF district in Glen Ellyn is likely several months away.