Northwest Suburban High School District 214 plans to file suit Monday against the village of Mount Prospect over creation of a new tax increment financing district that covers much of the same downtown area as a recently retired district.
The lawsuit, to be filed in Cook County circuit court, will ask the court to declare the recently approved TIF as invalid and prevent the village from doing anything further.
Village Manager Mike Cassady said he learned of the lawsuit Friday when contacted by the media.
"It's disappointing from our standpoint they would jump right into a legal process where our mutual taxpayers are funding both sides of the litigation," he said.
But District 214 school board Vice President Dan Petro described the litigation as a last resort in order to have "our concerns addressed."
"We reached out to them. We've sent emails. Our lawyers met with their lawyers. We met with the mayor. We got nowhere," he said.
District 214 officials say the village circumvented the "spirit and intent" of state law by including parcels from TIF 1, which was established in 1985 and dissolved last October, into the new TIF, which was approved in January and could last until 2040.
In a TIF, additional property tax revenue generated by new development is redirected back into the area for economic development efforts, instead of being distributed to the local schools, library, park district and other taxing bodies.
Under TIF law, the arrangement can last for 23 years and be extended for another 12 years.
So in effect, District 214 officials say, some areas of downtown Mount Prospect could be under a TIF for 55 years.
"How long do they plan to keep TIFs open? Is it indefinite or does it ever end?" Petro said. "This is (equalized assessed value) growth that should be going to the school district every year."
But Cassady said the new TIF would change the District 214 property value growth by less than 1 percent.
Consultants hired by the village and school district disagree on whether the area meets TIF district eligibility criteria under state law.
Village officials have said the new TIF district is necessary because growth and property values downtown are falling behind nearby communities and other parts of the village.
And they've disputed the notion that the old and new TIF districts are essentially the same, though there is some overlap.
Cassady said the properties that were included in the new TIF district were ones never developed the first time around and continue to lose value. The district covers more than 235 parcels on nearly 180 acres in the area around South Main Street and East Prospect Avenue.
Petro said district officials tried to persuade the village to cover only new parcels in the new TIF district -- not old.
"This is a combo now. It's the old and new," Petro said. "I don't think we have much say over the new stuff. I do think we have some say over the old stuff."
Cassady said an intergovernmental agreement proposed by District 214 would have rendered the new TIF district "moot" because of the amount of TIF revenue that would have been siphoned to District 214 after all.
The school board authorized filing of the lawsuit in a 7-0 vote Thursday night. Cassady sent a letter to district officials Friday asking them not to file suit and to allow village officials to make a presentation at the next school board meeting July 20.