‘More than impactful’: After 40 years, Libertyville’s tax allocation fund for downtown redevelopment officially dissolved

A pioneering measure instituted 40 years ago to redevelop Libertyville’s downtown area is officially finished, and the results speak for themselves, officials say.

The designation has ended, and the special tax allocation fund that fueled a transformation has been dissolved. The remaining balance of more than $2.2 million will be distributed to nine taxing districts in the village’s downtown redevelopment area, known as a tax increment financing, or TIF, district.

Two no-charge parking decks and related improvements, as well as streetscape, sidewalk, utility and other upgrades, are among the projects that produced an estimated $97 million in public/private investment, according to the village.

“There’s a lot of discussion about TIF and whether it’s impactful or not,” village Trustee Matt Krummick said this week before the village board voted to dissolve and disburse the remaining funds.

“In our community, it was more than impactful,” he added. “It changed the face of our community and our downtown, and I certainly would encourage its use appropriately again if we ever need to.”

In 1986, during a tough time for many downtowns amid the burgeoning shopping mall era, Libertyville officials used a new tool to designate a 158-acre area on either side of Milwaukee Avenue, mostly north of Church Street and including an industrial area to the east, as a TIF district.

The increment is the difference between the amount of property taxes collected based on current values and the much lower values frozen when the district was created. The added value is placed in a special fund and used for various elements associated with improving the area.

Sometimes controversial because of the property value freeze, the TIF method of redevelopment was established by state law in 1977 and remains in wide use.

TIF districts have terms of 23 years but can be extended. Libertyville’s TIF was established on Dec. 23, 1986. But with projects still outstanding, village leaders in 2009 took the uncommon step of asking the state legislature to extend the district 12 more years.

The big difference was that instead of the entire increment going into the tax allocation fund, only 30% was used. The remaining 70% was disbursed annually in proportionate shares to taxing bodies.

Libertyville’s extended TIF ended Dec. 31, 2021, when taxing bodies began to receive their shares of the full value. However, based on legal advice, the Special Tax Allocation Fund remained open, and the remaining funds were held for five years pending any potential property tax objections.

“The TIF has run its course. It’s done very well for the village, and it’s time to distribute and move on,” Trustee Pete Garrity said.

Before the vote, a resident asked whether the funds could be used to provide relief to homeowners. However, state law requires remaining special tax allocation funds to be disbursed to the taxing bodies as the official end.

mzawislak@dailyherald.com