Daily Herald editorial: A TIF success story
It practically goes without saying that the TIF taxing method is an overused mechanism for trying to incentivize development within a community. But every once in a while, a project comes along to show how the process can be worth its while.
Consider the Mellody Farm district in Vernon Hills.
A TIF, which stands for the far-from-descriptive term Tax Increment Finance district, is a portion of a town wherein community leaders freeze property tax revenues at a certain level for a specified number of years. As increased valuations of property within the district produce greater revenues each year, the difference, or increment, is set aside and used to fund improvements in the area until the life of the TIF expires.
The tool provides a kind of tax incentive for developers, adding revenues to help advance projects in the district and presumably breathe new life into parts of town that are not producing the property tax revenue they could. But it is open to criticism on various fronts.
Chief among them is that, by reserving tax revenues a district produces only for its development, schools, parks, libraries and other community assets lose money for up to 23 years, sometimes more with extensions, that otherwise would go to them. This can be especially damaging when developments such as apartments or other housing projects bring increased populations that local agencies must serve without getting additional resources required. And if such developments don’t live up to expectations, the hardships are even more pronounced.
Adding insult to injury, in order to comply with the law’s requirement that TIFs be used for rejuvenating declining parts of town, community leaders sometimes declare neighborhoods “blighted” that are far from what the term implies, thus further increasing the impact on local taxing bodies by taking away money the properties would have produced even if a TIF designation had not been assigned.
But, as described in a story by our Mick Zawislak last week, Mellody Farms has defied all those complaints. Only 33 acres of the 55-acre parcel at Milwaukee Avenue and Townline Road were usable when the district was created, and it had been languishing on the market for years.
Village officials agreed to reimburse developer Regency Centers $20 million to help with some of the public improvements and land costs, and Regency created a 272,242-square-foot shopping center including Whole Foods, Nordstrom Rack, REI and HomeGoods. In addition, developer/contractor Focus built a 260-unit luxury apartment building called The Atworth at Mellody Farm.
Vernon Hills Finance Director Thomas Lyons said the project has grown at the rate of 77% a year. He projected the TIF fund balance will exceed its outstanding debt of $16.3 million in 2026, meeting its obligations and allowing dissolution of the district 14 years ahead of schedule. The frozen assessed value of land used for taxing purposes was about $291,000, he said, compared to an estimated equalized assessed value in 2024 of about $46.6 million.
Few TIFs produce that degree of success, but those designed thoughtfully at the outset can achieve important community goals. As Zawislak has also reported, a Lakemoor TIF was designed to give taxing bodies half of the property tax increment and brought a Woodman’s and other successful operations to town. A 12-year extension of a Libertyville downtown TIF provided 70% of the increment to local taxing bodies. Similar positive outcomes can be cited throughout the suburbs.
These, of course, do not justify excesses or misuses of TIFs, but the Mellody Farms story and others like it can serve as models for what appropriate use of the tool can achieve.