Lake Zurich aims to extend tax district life
Lake Zurich village officials Monday night agreed to start work to extend the life of a special taxing district to give the village more time to pay off roughly $26 million in outstanding debt for downtown redevelopment.
The village board finance committee recommended hiring consultants Ehlers & Associates for the job, which could take several months.
Extending the 23-year life span of the downtown tax increment financing district, set to expire in 2025, would require General Assembly approval.
Ehlers also would revise revenue estimates and budgets, adjust goals and amend the redevelopment plan.
The village has spent more than $32 million in total redevelopment costs. Any request for debt extension would be for a minimum of 12 years and would increase the overall cost to taxpayers.
However, Lake Zurich would have to show it can repay its outstanding debt within the new timeframe.
Currently, the TIF fund is short about $500,000 annually. Revenues took a hit with the housing market slump, stalling two projects.
"(Extension is) one of the elements to make the TIF whole again," Lake Zurich Village Administrator Bob Vitas said.
Recognizing the village can't afford to pay its debts and other obligations, officials in November authorized refinancing $16 million in existing loans borrowed for downtown redevelopment.
With the refinancing, the village's total outstanding debt would increase by $6 million to $32 million over the life of the district, which captures property tax revenue increases into a special fund for the downtown redevelopment.
The village has more than $12 million in TIF funds tied up in land acquired for redevelopment that has since depreciated. In December, it reported no new growth in the past year and only $763,000 left in the TIF fund.
That cash balance would be nearly wiped out after the village pays $532,000 it owes Lake Zurich Unit District 95 toward tuition for new students generated from the TIF district during the 2007-08 school year.
The village's yearly principal and interest payments on the loans amount to roughly $1.7 million, but it generates only about $1.3 million in TIF revenues from the only finished redevelopment project within the district - Concord Village subdivision.
Refinancing a portion of the loans would push back to 2017 principal and interest payments due within the next five years.
With the debt extension, village officials pledge to pay off the balance using only existing TIF revenues by 2028, even if nothing else is developed in downtown.
"We are moving forward on the basis that nothing would happen, which is basically zero growth," Vitas said.
To extend the TIF, Lake Zurich also must garner support from area taxing bodies affected by the district.