GENEVA FOX RIVER REDEVELOPMENT PROJECT AREA (TIF 3)

The former Mill Race Inn property in Geneva is one area the city hopes to improve using TIF funds.

In 2013, in keeping with the Strategic Plan goal, the Downtown Area Station Master Plan and the Comprehensive Plan, the City began to evaluate and explore a number of economic development incentives that could be used as potential means for creating new funding measures and incentives to economic development in the City’s downtown area. Because Geneva is a non-home rule municipality, the types of incentives available are limited by state law. Tax increment financing was one of a few tools available that was identified as a potential means to spur needed investment.

In early 2014, the City engaged the services of SB Friedman Development Advisors to conduct a formal TIF Eligibility Study and Redevelopment Plan and Project for the Geneva Fox River Redevelopment Project Area (TIF 3). The Study concludes that the area qualifies as a “conservation area” under the Illinois TIF statute because at least 50 percent of the structures are 35 years of age or older and qualifying factors have been found to be present to a meaningful extent and reasonably distributed throughout the redevelopment area.

The Joint Review Board which consists of representatives from certain taxing districts with authority to directly levy taxes on the property within the Redevelopment Project Area including the city and a public member, selected in accordance with the act, met in early April 2016 to review the plan. The JRB has submitted a recommendation to the municipality that the Geneva Fox River Redevelopment Plan and Project and the Eligibility Study satisfied the plan requirements, the eligibility criteria and the objectives of the Act and recommended that the Geneva Fox River Redevelopment Project Area be approved.

Following the JRB meeting, the school district published information and held a public forum on the proposed TIF. The City Council held a public hearing to hear a presentation on the Study findings and to receive public comment.

The following are the first five statements and responses provided by the city of Geneva in a 14-page FAQ document. For the full text, visit this page on the city of Geneva website.

5 Statements and Responses

Statement 1: TIF diverts increases in property taxes within the TIF district away from taxing bodies such as schools for a period of 23 years. This means schools will be deprived of the natural market increases on EAV, funds that schools need to operate effectively. Diverting tax dollars away from schools to pay for economic development is counter intuitive because quality schools are a huge driver of economic growth in any municipality.

Response 1: It is not accurate to state that TIF will deprive schools of funds to operate. As a tax capped taxing body, the school district will receive the full levy amount with or without TIF.

TIF is not counterintuitive; the city recognizes that good schools are a significant economic driver but it is not the only driver. Many of the other drivers are the responsibility of the municipality and not the school district. The rationale for TIF is that only the city has the responsibility and authority to support redevelopment and, more broadly, economic development. All taxing bodies benefit in the long run from the city’s activities. It is, therefore, appropriate to utilize “their taxes” to help pay for costs necessary, such as roads, traffic control, utilities and to bring about redevelopment from which the entire city will benefit. Since only the city can incur those costs, it is fair to re-allocate those tax dollars to ensure that redevelopment actually takes place before a deteriorating condition affects the value of surrounding properties.

It is important to recognize that in the area proposed for redevelopment, the total EAV of the area has suffered from a lack of growth and the EAV has actually declined and has been less than the rate of growth in the CPI during all five of the last five year-to-year periods (see page 21 of the TIF 3 Study). The EAV of the area has grown slower than the balance of the city over four of the last five year-to-year periods.

It is also important to note that the city, by choice, has an ordinance which requires that developers donate either land or cash to the school district for any new development. This is a benefit to the school district that only the city can require of developers, even though the law does not allow the same benefit for the city. This benefit has been in place for several decades and has served the school district well.

Statement 2: TIF 3 will have a detrimental effect on school finances but more so a detrimental effect on taxpayers of the city of Geneva and school district.

Response 2: As a tax capped taxing body, the school district will receive the full levy amount with or without TIF. As earlier stated, it is important to recognize that in the area proposed for redevelopment, the total EAV of the area has suffered from a lack of growth and has actually declined and has been less than the rate of growth in the CPI during all five of the last five year-to-year periods. The EAV of the area has grown slower than the balance of the city over four of the last five year-to-year periods. Without TIF, the declining EAV will have a detrimental effect on the tax payers of the city of Geneva and the school district. The TIF program is a forward thinking investment strategy designed to secure the future viability of the Project Area and the city.

Statement 3: TIFs siphon money away from other taxing bodies (school district, library district, park district, etc.) for a period of at least 23 years. If these bodies are not receiving sufficient tax dollars to continue to provide the level of service expected by the public, they could be forced to increase their tax levies to compensate. This could result in increased property taxes. Residents of the school district outside of the TIF district (including taxpayers in the Mill Creek subdivision) would bear the burden of paying for any increased school district levies over the life of the TIF district.

Response 3: It is not correct to state that TIF will siphon money away from taxing bodies. State law limits the amount of additional property taxes a taxing body can request each year. Taxing bodies generally ask for more than what they think they can receive and this amount is adjusted by the county as the overall levy amount is capped by PTELL (Property Tax Extension Law Limit). Hypothetically, if a taxing body levied $1 million last year, they can levy no more than $1 million dollars + X % (CPI) the next year. TIF has nothing to do with this dynamic. The taxing bodies will still receive the revenues that they levy.

It is correct that other taxpayers (outside of the TIF District) will pay a slightly higher amount of property taxes as a result of the TIF in the short term. However, what is not said is that this increase would have happened anyway and in a more significant amount because without TIF intervention, the EAV of the area will continue to decline resulting in the tax burden being spread in a more significant amount.

Once the TIF expires and the new revenues are realized by all the taxing bodies, the amount paid will be distributed to new developments that would not have occurred without the TIF program. Also, it is not accurate to state that the TIF will last “for a period of at least 23 years.” TIF District law allows TIFs to last for a maximum of 23 years but can be dissolved any time before the end of the 23 year period should the city decide it is no longer necessary.

Statement 4: Creating a task force to encourage developers to continue to invest in Geneva, as they have in the past to take advantage of this great city — a city with a rich and vibrant history, with great public services including city services, parks and libraries, and one of the highest ranking school systems in Illinois, would be a better approach than TIF.

Response 4: A task force to encourage developers and tax breaks will not serve to overcome financial gaps in development pro formas or the cost of needed public infrastructure improvements that are hindering development that the TIF is designed to address. Tax relief and/or waiving of fees alone will not be able to generate upfront dollars needed to ready sites and encourage redevelopment.

TIF is a financing tool that allows municipalities to make targeted investment in order to spur economic development in areas that are displaying a combination of statutory specific eligibility factors that are not reasonably anticipated to be developed, or not reasonably anticipated to be developed during the 23 year TIF timeframe without assistance.

The TIF Act requires collaboration with the school district and other taxing bodies through the Joint Review Board. A meeting of the JRB was conducted in April to review the proposed TIF 3. At that meeting the majority of the members, including other taxing districts and the school district, reviewed the planning documents and voted to recommend the furthering of the plan.

Each taxing district within the City has a purpose and responsibility. The City is the governing body responsible for economic development, life safety, property maintenance, utilities, streets, sidewalks and public safety. The proposed TIF does not create a new plan for the area or the district. The proposed TIF is an implementation tool identified through Strategic Planning as a desired way to help finance public improvements and encourage and support private investment and redevelopment goals that are proposed in the Downtown Station Area Master Plan and the Comprehensive Plan. These plans were put into place with extensive public participation including collaboration with commissions, committees, property owners and the citizens of Geneva. There are few economic development implementation tools available to enable the city to implement and incentivize these plans.

Statement 5: The school district is willing to collaborate with the city and other taxing bodies to develop a TIF that meets the eligibility requirements and that brings economic development to Geneva without harming its schools and other public service providers.

Response 5: The city has collaborated with taxing districts and stakeholders as detailed in the preceding response. The school district is opposing the TIF because they fear the possibility of losing future tax revenue. The city’s responsibilities are broader than generating revenue. The city is planning for the future and working to protect all property values within the TIF and surrounding areas.

The city is the governing body that is responsible for economic development, life safety, property maintenance, utilities, streets, sidewalks and public safety. The School District has none of those responsibilities. The city is also working to implement ideas embodied in the Comprehensive Plan and the Downtown Station Area Master Plan, which were developed by the citizens of Geneva.