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Creation of TIF districts in DeKalb stalled

Published: Monday, Dec. 2, 2013 5:30 a.m. CDT • Updated: Monday, Dec. 2, 2013 8:51 a.m. CDT

DeKALB – The creation of two new tax increment financing districts will be in front of the DeKalb City Council again in December and January.

Action on the proposed South Fourth Street TIF district, which would stretch from Taylor Avenue to Fairlane Avenue, was postponed until January at the request of city staff. Jennifer Diedrich, the city’s economic development coordinator, said discussions are continuing with DeKalb School District 428, which was opposed to the district’s creation.

The creation of the Sycamore Road TIF district, which would include the Northern Illinois University Art Annex at 2211 Sycamore Road and the former Small’s property, generated a great deal of discussion at the Nov. 25 City Council meeting and will be up for a second reading this month. An abandoned building that had been a veterinary office at 2131 Sycamore Road cannot be added to the district unless it is annexed to the city.

TIF districts enable cities to encourage development by freezing the property tax revenues that local governments receive for a period of as many as 23 years. As the value of the property in the districts increases, the increased property taxes they pay are diverted to a special account and used for improvements. The city has used tax increment financing for many projects, including $2 million it has committed to the DeKalb library expansion project.

Interim City Manager Rudy Espiritu explained that the former Small’s property, now the Pappas development, would have to be removed from the Central Area TIF district before being added to the Sycamore Road district.

“If you do not intend to approve the Sycamore Road TIF, you don’t want to remove the Pappas property from the Central Area TIF,” Espiritu said. “The funds already obligated for development incentives would have to come the general fund if it’s not in a TIF district.”

The council voted unanimously to postpone action on the Pappas property.

Although TIF districts are created to spur development in blighted areas, Mayor John Rey said he’s been approached by two developers about the abandoned veterinary property without incentives.

“I think the Small’s [Pappas] development has stimulated interest in the area,” Rey said.

First Ward Alderman David Jacobson said the small size of the Sycamore Road district might make it unnecessary.

“I have difficult supporting it, “ Jacobson said. “We have way bigger problems than this one little property.”

Fourth Ward Alderman Bob Snow said he did not see the problem in creating the new district, however.

“If we create it, we preserve our options,” Snow said. “I don’t see a downside to creating it.”

Espiritu told the council that if they did not take act to add the developing property to the district soon, it would not be eligible in the future because it is being redeveloped. He explained that because the Pappas property has been improved, it would no longer be considered “blighted,” therefore it would be ineligible to be part of a TIF district.

“The school district supported the creation of this TIF,” Espiritu said. “It’s small enough that it shouldn’t affect the school district greatly.”

In answer to a question from the council, economic development consultant Roger Hopkins said other incentives for redevelopment could include sales tax and property tax abatement.

“If there’s no need for this incentive in the future, we simply close the TIF,” Espiritu added.

The council voted 5-3 for the first reading of the ordinances creating the Sycamore Road TIF district, with aldermen Lash, Monica O’Leary and Bill Finucane voting no.

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