Fourteen years before Chicago Premium Outlets was built in Aurora in 2003, the city formed a tax increment financing district to help spur development in the then-vacant land north of I-88 at Farnsworth Road.
As the outlet mall now has plans for a 130,000 square-foot expansion, many people, including Aurora's Development Director Bill Wiet, call the TIF district that helped create the outlets a success.
Contact information ( * required )
Still, the district has an expiration date, set for tax year 2013. So Aurora city council on Tuesday approved creation of two new TIF districts, one on each side of the expiring area.
The purpose of the new TIF districts will vary slightly from that of the original district created in 1989 because most land in West Farnsworth TIF seven and East Farnsworth TIF eight already is developed.
The goal of creating two new districts is to speed up redevelopment of obsolete properties near the outlet mall, said Alderman Abby Schuler, whose ward includes the outlet mall and the new TIFs.
"They're very beneficial to the city," Schuler said about the tax increment financing districts. "These TIFs include land that is already developed so it would lead to redevelopment of some properties that have probably seen their better days."
Once an area is designated a TIF district, taxes paid by property owners are handled differently. When a property increases in assessed value, taxes paid on the extra value go to a fund that only can be spent on certain expenses within the district.
"The city doesn't get the increased benefit right now," Schuler said. "It's reinvested in the area to share with other developers that want to come in there and share in some of the costs of improving that area."
Increased taxes paid on value added to TIF district properties also don't make it to school districts until the TIFs expire, usually in 23 years, said Bill Wiet, Aurora's development director.
But Aurora made an agreement with Batavia Unit District 101, which includes the land in TIFs seven eight, to provide some increased funding to the district during the next 23 years.
For TIFs seven eight, the Batavia district will get 10 percent of the incremental increase in property values annually, said both Brian Caputo, the city's Finance Director, and Kris Monn, the school district's assistant superintendent for finance.
And as the TIF including the outlet mall expires, Batavia Dist. 101 also will receive $1 million in January 2012 and January 2013.
"We were really pleased with them," Monn said of Aurora officials' willingness to negotiate the financial benefits for the district.
Aurora aldermen approved the two new TIF districts unanimously Tuesday night. They will begin in January 2012.
• Daily Herald staff writer Susan Sarkauskas contributed to this report.