TIF districts push tax bills up, Orr says

Cook County Clerk David Orr said Tuesday he backs legislation that would put some money now stockpiled for tax-increment-financing districts back into schools, park districts and other local governments.

The bill, sponsored by state Sen. Terry Link, a Waukegan Democrat, would allow the value of property reserved in the so-called TIF districts to increase by the rate of inflation each year, increasing the amount the property contributes to local taxing bodies. Now, property values in TIF districts are frozen for up to 23 years, with any tax increase that would have come from increasing property values instead diverted to the TIF to use for redevelopment.

Tax-increment-financing districts are yet another reason many Cook County property owners saw their taxes rise in a year when overall tax revenue was basically stable, Orr said. In the suburbs, $320 million was siphoned to TIF funds.

The largest suburban TIFs are the Hoffman Estates-Sears district and the Glenview-Naval Air Station, each with 2009 revenue of $26 million.

Orr took aim at Chicago TIFs as “broken” and creating “secret slush funds,” but generally praised suburban TIFs for being more open to public scrutiny and more likely to be used as intended.

TIFs first grew widespread in the '80s as a development tool to create funding for redevelopment. That's how they typically function in the suburbs, he said.

“Maybe because it's smaller,” Orr said, “it's easier for the public to have a better understanding of what's going on” with suburban TIFs. “In lots of suburbs, there's lots more debate about the TIF. Where it's going to be. The local newspapers cover it more. So it's a different species.”

Because TIFs are based on increases in property values, they can actually decline when real-estate values drop, as they did in many suburbs last year.

The Hoffman Estates TIF dropped 13.4 percent from $30.2 million last year. Wheeling's Town Center TIF dropped 87 percent this year, from more than $1 million to $136,000, and while Des Plaines' downtown TIF was level, dropping 1 percent to $5.4 million, others such as the Mannheim/Higgins, Wille Road/Mount Prospect and Five Corners TIFs declined by more than 25 percent.

Overall, the number of TIF districts is continuing to rise, to 264 in the suburbs and 158 in Chicago, both records.