TIF districts not worth the trouble

The City of St. Charles uses tax money to aid certain private business projects that the city designates as TIF, or tax increment financing, projects. Some of this aid has been used to pay $2 million to developer Shodeen for worthless covenants, to pay $13 million for land that is being given free to the First Street developer and to pay $24 million for infrastructure and improvements for the private First Street project. TIF projects will generate increased property taxes but those increased taxes will be used to pay off TIF bonds that fund the aid. This is in contrast to unaided developments like the Brownstone or the Milestone Row where the increase in property taxes goes to schools and parks in order to keep property tax rates down.

But that’s not all. The increased property taxes from these TIF projects are not nearly enough to cover the bond payments, so city tax money must be used to make up the difference. In an effort not to raise taxes, the city is making bond payments with money taken from reserve funds. This can only be done for a few years and it puts the city in a weaker financial condition. The the tax situation for each TIF project:

Baker Hotel, total taxes given to TIF project to date, $ 3,100,000; projected future taxes that will go to TIF project, $1,900,000.

Moline Foundry, to date, $3.3 million; projected future taxes, $2 million;

St. Charles Mall, to date, $1.8 million; projected future taxes, $2.4 million;

First Street, to date, $9.7 million; projected future taxes, $40.3 million;

St. Charles Mfg., to date, $1.8 million; projected future taxes, $3.9 million.

You would think that the mayor and city council would start to shy away from TIF projects, but no, the city is planning to give $5 million to a Lexington Homes development.

Gene Kalley

St. Charles