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DeKalb’s tax increment financing districts approaching retirement

Barb City Manor staffer Joyce Booker (left) serves Ruth Moore lunch July 7 in the facility's dining hall. The dining hall was one of the improvements to Barb City Manor funded by DeKalb's tax increment financing district.
Barb City Manor staffer Joyce Booker (left) serves Ruth Moore lunch July 7 in the facility's dining hall. The dining hall was one of the improvements to Barb City Manor funded by DeKalb's tax increment financing district.

DeKALB – In four years, Barb City Manor will have $100,000 less a year to spend on improvements to its aging facility, a fact administrator Maureen Gerrity knows all too well.

In 2018, the tax increment financing district that covers an area in the south central portion of DeKalb will expire, leaving places like Barb City Manor that benefit from the special tax designation without money they’ve relied on for years.

“For us to just assume the city will be able to help us – they’ll be able to pull it out of somewhere – that’s not realistic,” Gerrity said.

So, it came as no surprise to Gerrity when during a recent DeKalb City Council meeting 6th Ward Alderman Dave Baker told her not to “count on a dime” from the city after the TIF district expires.

City officials and local organizations already are planning to reduce spending or find money elsewhere because one of the city’s TIF districts expires in 2018, while the other will expire in 2020.

Combined, the city’s two TIF districts will produce more than $8 million in the next year, which will be used for road repairs, building improvements and supporting the city’s day-to-day operations. That operational money will come from part of the $2.8 million in tax increment financing money the city will declare as surplus and distribute to local government.

DeKalb’s district history

TIF districts allow the city to divert property tax money into a special account that is used to rehabilitate blighted areas. The city established the Central Area TIF district in 1986 and extended it for 12 years in 2008. The city’s second TIF district, which covers the south central area of the city south of Fourth Street and north of Taylor Street, was established in 1995.

The city of DeKalb owns Barb City Manor, formerly the public DeKalb hospital. The facility
operates under an agreement with the city to offer housing to seniors with low to moderate income, which it does for about 62 residents.

When the city established the second TIF district in 1995, funding capital improvements in Barb City Manor was part of the deal, said Assistant City Manager Rudy Espiritu.

“Before, it did not have a funding source for improvements,” Espiritu said. “There were some much needed improvements, so we looked at how do we pay for improvements if the city doesn’t have a funding source.”

Gerrity said that money has paid for things like an elevator lift, dining room renovations and roof repairs in the past 19 years.

TIF dollars support things like Barb City Manor and the Egyptian Theatre, but they also go toward street repairs and downtown improvements. The city uses $1.4 million of TIF revenue to support its general fund, which pays for day-to-day operations, salaries and things residents use.

“It’s a huge deal because there’s funding that will be lost not only for our general fund, but for capital improvements,” Espiritu said.

That means things like street repairs are in danger. The city this year won’t use any money outside of $1 million in TIF funds to pay for street repairs. City officials also are considering using TIF funds to pay to renovate city hall.

Mayor John Rey predicts officials and staff will spend an extensive amount of time reviewing things like street repairs and improvements to meet city expenses without TIF money.

“Clearly, there’s going to have to be some give-and-take to those infrastructure and service needs,” Rey said.

Planning for the end

By law, the city can’t bank the money generated by the TIF districts to use years after they expire, said Kathleen Field Orr, the city’s special counsel for the district expiration plans. DeKalb, like any other city, has to commit to those projects no later than the time it will receive the taxes from the 23rd year of the district’s existence.

“A city would not be well-advised to start a project in the 23rd year,” Field Orr said.

To prepare for the dissolution of the TIF districts and figure out where those dollars should be spent, the city established a committee examining how to use the money they generate. The committee includes employees from several city departments assisted by Field Orr. They have met once since June.

“DeKalb has a professional, knowledgeable staff that are looking at this in due order,” she said.

Officials will put a plan in place within a year, Espiritu said. Right now, where the city will use the money hasn’t been decided.

Rey wants to be certain the city is deliberate in where money is spent so there are tangible results once a TIF project is complete.

“I’ve been concerned we not allow individual projects to dictate without stepping back and looking at the big picture,” Rey said.

He pointed to projects contained in the city’s City Center plan, such as creating a communiversity commons area, as places he would like to push money.

“I would like to see TIF revenues going into public-private partnerships,” Rey said.

What was certain in Espiritu’s mind that establishing another TIF district, such as the one along South Fourth Street and Sycamore Road that the council backed away from earlier this year, will not be the city’s solution.

“I think the city has to prepare for the expiration of these TIFs first,” Espiritu said.

Planned spending

Select TIF expenses for fiscal 2015

Streets: $1 million

Downtown improvements: $100,000

Barb City Manor: $100,000

Egyptian Theatre: $100,000

Source: City of DeKalb

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