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Review board endorses proposed DeKalb TIF districts

Published: Thursday, July 25, 2013 5:30 a.m. CDT

DeKALB – Representatives from DeKalb’s local taxing bodies recommended Wednesday the creation of new tax increment financing districts along Sycamore Road and South Fourth Street.

But the decision to create those districts ultimately rests with the DeKalb City Council. The council will host a public hearing on creation of the two districts at its Aug. 12 meeting. The city will have 90 days after that to establish the districts.

“This is strictly a recommendation from the [Joint Review] Board,” Interim City Manager Rudy Espiritu said.

DeKalb already has two TIF districts, which are a special mechanism local governments can use to spur development in blighted areas. The property taxes that local taxing bodies – such as schools, park districts and city government – receive from properties in these districts are frozen for 23 years. As property values increase in the area, the increased property taxes are diverted to a special account and used for improvements.

Property taxes are an essential source of revenue for DeKalb School District 428, which last school year received about 69 percent – or $46 million – of its total revenue from local property taxes.

If the school district is unable to reap the benefits of growth in the South Fourth Street district, which includes property on either side of the street between Taylor Avenue and Fairlane Avenue, it will lead to higher tax rates, said Andrea Gorla, the district’s assistant superintendent of business and finance. The school system opposes creation of the South Fourth Street district.

“The ramifications – this is going to have long-term [effects] on the tax rate,” Gorla said. “With the declining [property value], losing local funds, losing general state aid funds – that’s why [the school board] said this is not the right time for us to be approving that type of value falling under a TIF.”

Gorla and the school district did support the Sycamore Road district, a much smaller area that includes the former Nelson Veterinary Clinic and the Northern Illinois University Art Annex property.

The Joint Review Board has recommended creating a 15 percent surplus share through that district, which would funnel a total of $792,136 over the TIF district’s 23-year lifespan. The City Council can unilaterally amend that surplus share, Espiritu said.

Espiritu said costs of improvements along the South Fourth Street corridor are expected to cost more than the TIF district can generate. City officials are estimating to collect $3.6 million in increment revenues, but that would pay for only about a quarter of the $14 million in proposed projects there.

To make up that $10.4 million shortfall, the city plans to apply for grants and use the increment to pay for any local match, Espiritu said.

“Now we can actually apply for some now that we would have a funding source,” Espiritu said.

Gorla asked Espiritu if it was possible the city could use its authority to mandate the clean-up of certain properties along South Fourth Street. The former Protano’s Auto Parts site at 1151 S. Fourth St. has been long identified as a property that is possibly contaminated.

“By creating a TIF, we have a funding source to leverage some of the grants to do that,” Espiritu said in an interview about environmental remediation along South Fourth Street. “In order to entice a developer to come to South Fourth Street, there needs to be a stimulus to get them here. Hopefully, the TIF provides that stimulus.”

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