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Local

DeKalb School District 428 Board discusses closing TIF 1 early

Superintendent cautions board on committing to TIF 3

DeKalb School District 428 Board President Victoria Newport and Superintendent Jamie Craven discuss TIF 1 and TIF 3 during Tuesday's board meeting at the Education Center, 901 S. Fourth St.
DeKalb School District 428 Board President Victoria Newport and Superintendent Jamie Craven discuss TIF 1 and TIF 3 during Tuesday's board meeting at the Education Center, 901 S. Fourth St.

DeKALB – The DeKalb School District 428 Board will not be moving forward with a surplus agreement with the city of DeKalb for a planned third tax increment finance district.

During Tuesday’s board meeting, Superintendent Jamie Craven updated the board on the latest from the city’s Joint Review Board, which oversees DeKalb’s TIF districts. The conversation focused on the proposal for a new district, which city officials call “TIF 3,” that City Council members are expected to vote into existence Monday.

The board also discussed DeKalb City Manager Bill Nicklas’ idea to close the TIF district known as TIF 1 in 2020, rather than wait for its scheduled expiration in 2021.

“Closing TIF 1 would bring the [estimated assessed value] back on our tax rolls one or two years early,” Craven said. “Under the 2007 [intergovernmental agreement with the city for TIF 1], half of that surplus has to be shared back to the taxing bodies.”

TIF 1, created in 1982, includes downtown DeKalb, the Pleasant Street neighborhood, Sycamore Road and later was expanded to include the Ellwood Historic Neighborhood. The proposed TIF 3 would be significantly smaller.

When a TIF district is created, the assessed value of properties within the TIF boundaries are frozen at the rate they are at when the TIF goes into effect. Property taxes are collected at a set rate, meaning the taxing bodies that collect revenue from taxes also get a set amount. Under the TIF 1 surplus agreement, the city agreed to distribute some of the money collected over the life of the TIF to taxing bodies.

Since many of the properties in TIF 1 will begin to pay higher property taxes when TIF 1 expires, the district stands to gain more from collecting regular property taxes outside of TIF 3 than through a surplus agreement within it.

If TIF 1 were to close early, the district would receive about $2.1 million from surplus distribution. The city has not indicated whether it will pursue a surplus agreement for TIF 3.

“So it really benefits the district to close TIF 1 as soon as we can,” board member Rick Smith said.

The board did not vote on closing TIF 1, but gave consensus for Craven to take back to the Joint Review Board meeting for discussion.

“TIF 3 is in the hands of the City Council,” Craven said. “But given the proposed footprint of TIF 3, it’s relatively small. It’s projected to generate very low increment. It’s my belief that the [Joint Review Board] will be recommending not pursuing a surplus agreement at this time.”

“Why [is the city] doing it now?” board member Kerry Mellott asked about the city’s desire to create TIF 3 and the possibility of closing TIF 1 early.

“I don’t want to be out here speaking for the city, but the ‘why now’ is they’ve identified properties that they believe there are interests in developing by other investors,” Craven said.

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