Des Plaines' city council has started the process of restructuring an existing special taxing district plagued by a growing deficit.
The city's sixth Tax Increment Financing district, encompassing a triangle-shaped piece of land roughly bounded by Higgins and Mannheim roads and Greco Avenue, is in an estimated $6.8 million in the hole this year, and on track to be $20 million in the red by 2024, when it's expected to expire.
Contact information ( * required )
The council this week unanimously agreed to formal public hearings to discuss the TIF restructuring.
City officials plan to carve out a portion of the existing 40-acre TIF district and make a new, seventh TIF district, where they've been hoping for redevelopment for more than a decade, but proposed projects have failed to get up off the ground.
The size of TIF 6 would be reduced, encompassing only those properties north of Pratt Avenue where businesses are largely built out. The accumulating deficit -- much of which is a result of the city's 2001 purchase of a 5-acre parcel with $10.4 million in borrowed funds -- would remain in the restructured TIF 6.
Creating a new TIF 7 -- encompassing the city's property, a bank-owned 4-acre property, and a small parcel owned by the Rosemont Park District -- could bode well for redevelopment of the mostly-vacant land, officials say.
When TIF 6 was created in 2001, the equalized assessed values of properties within the district were set as a baseline. All property taxes generated above that were intended to be reinvested back into redevelopment projects. Instead, property values sank, and the city would now need a project to create $2.5 million in property taxes just to break even, according to City Manager Mike Bartholomew.
By starting a new TIF 7, the city is essentially starting from scratch by establishing a lower base property value, Bartholomew said. The district could be in place for up to 23 years.
As part of the plan, city officials have proposed returning the McDonald's property at the corner of Higgins and Mannheim to the tax rolls, which Bartholomew says was a key part to securing support from Des Plaines Elementary District 62 and Maine Township High School District 207.
A total of 39 percent of McDonald's property tax bill goes to District 62, while 25 percent goes to District 207. Des Plaines receives 13 percent.
"It seems like most towns around us are having some rough experiences with TIFs in local units of government," said Mayor Matt Bogusz. "I think it's reassuring, early on, that our local schools -- both District 62 and District 207 -- are open to the idea of restructuring because they recognize right now that without restructuring, neither they nor the city will see any revenue."
A joint review board of local governmental agencies is expected to meet Aug. 20 to review the TIF plans. The public hearing is scheduled for Sept. 15. The new TIF structure could be in place before the end of the year.