Many taxing bodies agree Libertyville's downtown is good investment

Downtown Libertyville wasn't always pleasant.

In 1986, when buildings were old, tired and, in many cases, vacant, village leaders determined that a bold stroke was needed to get the proverbial juices flowing.

They established a tax increment financing district encompassing 158 acres on either side of Milwaukee Avenue, mostly north of Church Street, as the focus of redevelopment.

While there has been a marked change in the look and popularity of the village's Main Street -- as well as a four-fold increase in property values -- the job isn't done, and the village is asking for more time, and more money.

And many of the traditional critics of TIF districts -- school, library and park districts that rely heavily on property taxes -- are supporting the measure.

"We need to finish what we started," says Mayor Jeff Harger.

Parking decks on both sides of Milwaukee are the final pieces but will require $14 million or more the village doesn't have.

To raise it, the village is proposing to extend the TIF district 12 more years.

By state law, a TIF district lasts 23 years. During that time, taxing districts in the area -- like schools, park districts and village governments -- get the same amount of property tax money each year. Extra tax money from increased property values goes to pay for improvements to the area.

Vitality of the downtown area has helped boost home values throughout the village and kept them strong. Would the opposite happen if it regressed without the continued investment?

"This is the kind of thing the village is trying to hedge its bets against," said Betty-Ann Moore, Libertyville Township supervisor. "We have to hope they're right."

The township board last week joined other taxing districts in supporting the proposed extension, a condition of it being considered for approval by the state legislature and Gov. Rod Blagojevich.

Unlike the original term of the district, in which the taxing bodies saw no increase in property tax revenue as the area soared in value, the village would share 70 percent of future increases rather than none.

"We thought it was fair. We figured out what we needed and split (the rest) up," Harger said. "The extension was the best opportunity to benefit not only the village but all the taxing districts."

Taxing bodies would receive much more property tax revenue if the district is allowed to expire in December 2009.

Libertyville-Vernon Hills Area High School District 128, for example, would receive an estimated $930,000 per year. Its 70 percent share would be about $650,000.

Mark Friedman, superintendent of Libertyville District 70, explained that the influx of property tax if the TIF district expires would only be a one-year bonanza. In subsequent years the money would be subject to the tax cap, which has been less than 5 percent in recent years.

That limits the amount of money taxing districts can ask for. Even if the value of property skyrockets, the tax rate has to drop to stay within the cap.

Under the village's extension offer, the 70 percent received by the taxing districts is considered unencumbered revenue and is not subject to the tax cap. The consensus among the taxing bodies is that the unfettered 70 percent is worth it overall to keep values stable.

"It is an incentive," Moore said during the discussion last week. "You could say it's bribery or you could be realistic and say it's a good deal."

The village has used TIF district proceeds to acquire property, install sewers, replace sidewalks, fix streets and establish a low-interest loan pool, among other improvements.

Since it was established, the value of the 370 parcels in its boundaries has nearly quadrupled to about $45 million for 2007 taxing purposes. Over its life, about $25 million has been generated for village use in the district.

Not everyone is sold on the idea of extending the TIF district, however. Libertyville Township Highway Commissioner Bill Morgan said he has missed out on about $131,000 the past 22 years, money that could have been used for road projects.

"We're giving money to a village that's not a blighted area. It's not in economic decline," he said.

Supporters say a vibrant downtown has a benefit beyond its borders.

"All of Libertyville did benefit from the TIF being there," said Beth Ruyle, the village's TIF district consultant.

"We believe there will be even additional benefit if we do these parking improvements. We believe this is a critical point for the downtown."