DeKALB – No Walmart. No Target. No preservation of historical sites such as the Sycamore train depot and DeKalb’s Egyptian Theatre.
Government officials throughout DeKalb County say that would be the reality without the use of tax increment financing districts.
In 2012, more than $9.2 million in tax revenue was generated by TIF districts around DeKalb County, accounting for about 5 percent of the total tax dollars collected. That number is expected to grow next year with new districts starting in Cortland and Maple Park this month and two more possibly coming to DeKalb.
The TIF designation freezes property taxes collected by local governments at a base level for 23 years. As the property values increase in the district, all property tax revenue above the base level is diverted into a special fund that can be used for economic and public improvements.
The mechanism has worked well in Sycamore, where two major projects were completed in 2012 with the assistance of tax increment funds. The city’s district, which generates about $60,000 a year, provided more than $100,000 to stabilize the historical train depot and $71,559 to demolish the old Fargo Motors building.
The depot was renovated and occupied by the DeKalb County Community Foundation this year with the help of private donations.
The site of the old Fargo Motors building now is a mixed-use facility with high-end apartments.
Sycamore City Manager Brian Gregory said his city’s district, which is set to expire in 2023, has helped create a more welcoming and appealing downtown.
“I think this TIF has been very successful and accomplished a lot of the goals we set out,” he said. “Based on the success ... another TIF would be one option to look at with redevelopment projects.”
While Sycamore accomplished two major projects in 2012 with a small district, DeKalb has reshaped the city with two major districts that bring in more than $8.5 million per year combined.
DeKalb’s districts helped revitalize Sycamore Road with the additions of Target, Walmart and major shopping corridors. Improvements to downtown, historical elements and infrastructure also were possible because of those funds, DeKalb City Manager Mark Biernacki said.
One criticism of the strategy is the short-term limits on tax revenue other taxing bodies such as school and park districts receive. But Biernacki said the increment – the extra revenue collected over the base amount – not only can go to improve schools, but the addition of businesses such as Target help bolster tax rolls and create more revenue for all entities.
“We’re blessed to have the working relationship we do with the taxing districts,” Biernacki said. “We work to make that longer term more short-term by ending TIF districts in less than 23 years.”
The financial tool can be especially helpful to small communities such as Kirkland, which has a population of 1,744. Kirkland Village President Les Bellah said his village’s district, which generates about $275,000 annually, is the only way Kirkland has enough money to make improvements.
Bellah said that since 1995, tax-increment money has gone toward resurfacing all of Route 72, purchasing street lights, widening sidewalks, improving sewer lines and assisting parks and schools with projects. The district encompasses about a third of the village, he said.
“It’s one of the best tools for economic development,” he said. “I would love to see another TIF district taken on.”
Cortland is hoping its venture into tax increment financing will yield similar successes to its Sycamore and DeKalb neighbors.
Cortland Administrator Walter Magdziarz said the new district encompasses about a quarter of the town and will focus on rehabbing older neighborhoods and enticing business and industry.
“Cortland is not a home rule community, so there is not a whole lot of economic incentive we can give,” he said. “A TIF district is about our only tool.”
Tax increment financing revenue
Here’s how much each community received in 2012 through its TIF districts, according to DeKalb County Treasurer Mark Todd.
• DeKalb: $8,531,246
• Malta: $358,309
• Kirkland: $275,633
• Sycamore: $59,697
• Waterman: $58,416