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DeKalb considers funding options for street repair as TIF districts near expiration

Published: Tuesday, Aug. 12, 2014 9:47 p.m. CDT • Updated: Tuesday, Aug. 12, 2014 10:24 p.m. CDT

DeKALB – The city’s streets could need $33 million in repairs over the next five years, but a key funding source for the work will dry up by the end of the decade.

That has city leaders considering options including increasing the sales tax to generate more revenue.

Of the $1.5 million the city plans to spend on streets this year, $1 million comes from the city’s two tax increment financing districts. TIF districts allow the city to divert property tax money into a special account that is used to rehabilitate blighted areas.

However, one of the city’s TIF districts expires in 2018, while the other will expire in 2020, meaning the only source of funding left will be the local gas tax.

In turn, DeKalb’s leaders are asking the finance advisory committee to discuss available options well in advance of next year’s budget talks and the TIF districts’ expiration. The committee will meet monthly and work with the City Council to find a solution.

“Our goal is to look at this holistically,” City Manager Anne Marie Gaura said during the DeKalb City Council’s committee of the whole meeting Monday. “Our goal is to say ‘everything is on the table,’ including whether the finance advisory committee wants to look at [and] the City Council would be open to utilizing the sales tax as a dedicated revenue to fund capital projects.”

Based on the data already available, streets in the TIF districts alone will need nearly $8 million in repairs over the next five years to stay in good condition, City Engineer John Laskowski said.

The Central Area TIF district covers downtown DeKalb and Sycamore Road, while a second TIF district that includes a portion of the city between Lincoln Highway and Taylor Street.

Streets in the TIF districts account for only 24 percent of city streets, but for 71 percent of street repairs because they city relies on TIF money to fund repairs. Legally, TIF money has to be used within the TIF district.

City staff recently hired contractor Infrastructure Management Systems to take inventory of the streets outside of the city’s two TIF districts. Some initial data will be available in September, which should tell city staff how to prioritize street work.

Without data on streets outside the TIF districts, but knowing they account for 76 percent of the city’s streets, Laskowski projected the city would need to spend $33 million over the next five years, or $6.6 million a year.

One way to help meet the city’s street needs would be to increase to the city’s 1.75 percent local home rule sales tax. Increasing the sales tax by 1 percentage point would bring in an additional $4 million, Assistant City Manager Rudy Espiritu said.

“Obviously, this is a serious issue,” Espiritu said. “This is a No. 1 issue for the City Council. This is just one option for the City Council to consider.”

If city leaders decided to consider a tax increase for Jan. 1, the Illinois Department of Revenue requires the city to submit a certified copy of the ordinance by Oct. 1. An increase July 1 would require the state know by April 1.

Any increase to the property tax levy would have to be considered before the levy is filed with DeKalb County in December.

Whatever option city leaders choose, it will be critical to continue funding street repairs, Laskowski said. He explained 28 percent of the city’s streets are in failing condition, 45 percent are in pre-failing condition and 27 percent are satisfactory.

By the numbers

$1.5 million

Amount budgeted for street repair this fiscal year

$1 million

Amount of street repair funded with TIF money

$33 million

Estimated cost of needed street repairs for the next five years

$6.6 million

Estimated annual cost of street repairs

27

Percentage of city streets that are “failing”

45

Percentage of city streets in “pre-failing” condition

28

Percentage of city streets in satisfactory condition

Source: City of DeKalb

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