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updated: 3/10/2014 10:35 AM

Elk Grove Village board to vote on massive TIF district Tuesday

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  • Elk Grove Village officials are considering a Tax Increment Financing district to spur redevelopment of the village's aging business park.

      Elk Grove Village officials are considering a Tax Increment Financing district to spur redevelopment of the village's aging business park.
    Mark Welsh | Staff Photographer

  • Elk Grove Village officials say aesthetic improvements like this are among the projects that could be funded with implementation of a Tax Increment Financing district in the business park.

    Elk Grove Village officials say aesthetic improvements like this are among the projects that could be funded with implementation of a Tax Increment Financing district in the business park.
    Sketch Courtesy Elk Grove Village


Elk Grove Village trustees will vote Tuesday on creation of a special taxing district that could generate nearly $900 million to help pay for redevelopment projects in a large portion of the village's sprawling business park.

The proposed Tax Increment Financing district is needed, village officials say, to revitalize an aging industrial park where property values are declining and occupancy rates have dropped.

A village-hired consultant's report proposes an estimated $860 million in redevelopment projects funded through the TIF, work that would include upgraded public utilities, infrastructure, stormwater detention and streetscape improvements, among other projects both public and private.

Without the TIF, redevelopment wouldn't "reasonably be anticipated," according to the report, since there hasn't already been growth from private enterprise.

"There's some significant work -- modernization work and public improvements -- that needs to be done to make sure the nation's largest business park stays viable for the long-term future," Mayor Craig Johnson said.

Roadway and stormwater improvements are a major part of the plan, including improvements to streetscape design, curbs, gutters, street lighting, traffic signals, water mains, and sanitary and storm sewers, according to the consultant's report.

The report states the village is planning to borrow $36 million for water and sewer improvements, and the TIF could help pay for some of those costs.

Were the village board to adopt ordinances instituting the TIF, property taxes paid to all local governments within the area would be frozen at their current levels for as many as 23 years. Property taxes collected above those levels would be allocated to a special village fund used to pay for public and private improvements.

The TIF district would cover a 917-acre area on the east side of the business park, primarily throughout the Busse Road and Elmhurst Road corridors. There are 388 buildings within the proposed TIF -- 75 percent of which are 35 years of age or older. Many of those buildings, officials say, are below minimum code standards and have outdated designs, such as low ceilings and loading docks that front main streets.

The boundaries of the proposed TIF were chosen because that area's tax base has declined, Johnson said. According to the consultant's report, the equalized assessed value in the proposed TIF area fell 35.5 percent between 2007 and 2012.

Opponents of the plan, like resident Tim Costin, said the village's TIF plan lacks specifics, especially about what projects would be funded by the $860 million.

Costin, who has filed Freedom of Information Act requests with the village seeking information about the proposed TIF, also disagrees with Johnson that the TIF won't be a tax increase. Instead, Costin says, it will be "buried" in the levies of other taxing bodies, such as school districts, the park district, library and county.

"It is a tax increase. There's no way you can come up with $860 million of new revenue without a corresponding $860 million in new property taxes," Costin said. "There's no loaves and fishes here. It has to come from someplace."

Johnson has compared the TIF to "a pebble being dropped in the water" that will result in positive economic benefits and a stronger tax base for areas outside the district.

"TIFs have shown if done properly, they have an effect outside of the boundaries," Johnson said. "It won't only have a positive impact in the TIF area, but it will expand into the rest of the business park. Then the tax base will increase there also."

A joint review board of officials from taxing bodies within the proposed district convened in January and issued an 8-1 advisory vote in favor of the TIF. The lone vote in opposition came from Elk Grove Township Elementary District 59.

Ruth Gloede, the district's assistant superintendent for business services, said district officials and the school board wanted more time to examine the proposed TIF and the impact it could have on the district. Their primary concern, she said, is that District 59's tax burden could shift onto property owners outside the TIF district.

"Somebody else has to bear that tax burden and has to generate a tax rate," Gloede said. "The district will continue to receive its levy, but it will shift the burden on others. People who are outside of the TIF and don't have these incentives end up paying a higher tax rate, which ends up being a tax increase."

Johnson said implementing the TIF now will make sure tax revenues don't go down any further due to declining values. If the TIF is successful, taxing bodies could receive back surplus revenues before the typical 23-year life cycle of the TIF expires, he added. Villages that operate TIFs have the option of returning unneeded revenues to other taxing districts.

Richard Dye, an economist with the Institute of Government and Public Affairs at the University of Illinois who has studied TIFs, said he believes TIFs are "problematic" and "questionable" public policy because they divert revenue from taxing bodies to pay for economic development projects.

"A TIF doesn't create value," Dye said. "It merely moves it around from one location to another or from one community to another."

However, he said a TIF within an industrial park -- if done with planning and deliberateness -- is the "ideal possibility."

"You're drawing a line saying, 'Build it and they will come,' or 'Delineate it and they will come,'" he said. "Specific communities have had success with TIF where they have had managed negotiations with developers."

If approved, the TIF would become the third one in Elk Grove Village. The other two resulted in new retail developments: the Elk Grove Town Center near Biesterfield and Arlington Heights roads, and a shopping center near Devon Avenue and Nerge Road.

The village board will vote on TIF ordinances 7 p.m. Tuesday at the Charles J. Zettek Municipal Building, 901 Wellington Ave.

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