DeKALB – DeKalb School District 428 has thrown its support behind a new tax increment financing district along Sycamore Road, but not one along South Fourth Street.
Board President Tom Matya said the decision is largely based on each area’s ability to accumulate a surplus. Right now, city officials project surplus revenue will be created during the life span of the Sycamore Road TIF district, but not the South Fourth Street area.
“With the Sycamore Road proposal, there was a solid plan that we felt came forward that shows a high likelihood of payback to the district, with the possibility of the TIF district being closed earlier,” Matya said.
The school board voted unanimously Tuesday to support the Sycamore Road proposal, and to oppose the South Fourth Street proposal.
The board’s support or opposition is largely symbolic, though. The school district is a member of the Joint Review Board, which consists of the eight local taxing districts that will be affected by the new TIF districts.
Ultimately, the decision rests with the DeKalb City Council, said interim City Manager Rudy Espiritu. The council can establish the districts without the blessing of the Joint Review Board. The board is scheduled to meet Wednesday to issue its recommendation, two days ahead of Friday’s deadline.
Tax increment financing is a special funding mechanism local governments can use to spur development in blighted areas. It freezes the property taxes that local governments receive from an area, usually for a 23-year period. As development occurs and property value increases, the corresponding increase in property taxes is diverted into a special fund that can be used for improvements.
DeKalb already has two established TIF districts.
The proposed new district on South Fourth Street would encompass property on either side of the street from Taylor Avenue to Fairlane Avenue, while the other would include the former Nelson Veterinarian property at 2131 Sycamore Road, and the Northern Illinois University Art Annex at 2211 Sycamore Road.
School board members were concerned the proposed districts would affect their property tax revenues. Most Illinois school districts receive the bulk of their money from local sources. For the 2012-13 school year, District 428 received about 69 percent – or $46 million – of its total revenue from local property taxes.
“Clearly, you do have a blighted area, but this might not be a time to ask the school district to give up some revenues,” said Tracy Williams, the school board’s vice president.
Factoring into the school board’s decision to support one TIF district but reject the other is the projected cost of development in each area. City officials are projecting to break even at the Sycamore Road TIF district, but projects in the South Fourth Street TIF district are expected to cost $14 million.
However, the city is expecting to collect only $3.6 million in increment revenues. Espiritu said they are looking to make up the difference through state grants and private development. Mary Hess, a D-428 school board member, said the proposition seemed risky.
“It kind of seems like a gamble,” Hess said.
Andrea Gorla, assistant superintendent of business and finances at District 428, said the school district’s tax rate would rise higher if the districts were established.
She said the district is already expecting that rate to go up because of the district’s debt.
“It [will have more impact] to our tax rate than it would have in a growing property value situation,” Gorla said.