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Mt. Prospect TIF districts slow, but in the black

The recent recession and a slow recovery have silenced activity in many suburban tax increment financing districts.

Mount Prospect leaders say growth in their TIF has slowed, but hasn’t stopped.

“We’re fine. The TIF is still in the black,” Community Development Director Bill Cooney said. “In this environment, that’s a very good thing.”

Property values are the engine that drives TIF districts. When values go up, towns can use the associated increase in property tax revenue to fund improvements to the area — everything from new sidewalks to the acquisition of property. When values stagnate or go down — as many have during the recession — it can leave a TIF district in a deficit, with the municipality on the hook.

Mount Prospect created its TIF in the mid-1980s to help fund an overhaul of the downtown. In the 1990s and early 2000s, downtown redevelopment took off, resulting in hundreds of new condominiums and more than 30,000 square feet of new retail space.

Property values skyrocketed during that time, but they’ve come back down to earth since. Overall, growth is still occurring within the TIF, but at a slower rate than the village had projected. Cooney said the value of all the property in the TIF was about $46.9 million in 2007. In 2010, the value totaled about $50.1 million.

“The recession really put a dent in redevelopment activity and the growth of the (property values) in the TIF,” he said. “It’s still tough to get new projects going. But we’re still on solid ground there.”

The TIF is set to expire in about 10 years, at which point other taxing bodies like schools will again get the revenue they forego in a TIF.

Until then, Cooney said the only way to keep a TIF from heading into the red is to get development activity going.

“In that sense, you’re limited by what the market is like,” he said.

Des Plaines is trying now to pull one of its five TIF districts — a long dormant area near Mannheim and Higgins roads — out of a deficit. The city recently approved preliminary development plans for the site that include a parking garage and hotel.

Des Plaines City Manager Mike Bartholomew said the weak economy stalled previous efforts to redevelop that land.

“We’ve worked hard on it and think we’ve got something that will begin to turn it around,” he said.

Des Plaines borrowed money to acquire and prepare land in the TIF for redevelopment, hoping to recoup those costs with revenues generated by a potential future rise in property values. Since redevelopment hasn’t occurred, those revenues haven’t materialized. City officials estimate that the TIF could show a $5.9 million deficit by the end of the year.

Despite the difficulties with the Mannheim-Higgins TIF, Bartholomew believes that TIF districts remain a valuable tool for municipalities.

“I know the experience we’ve had with the economy has soured some people on TIFs,” he said. “But look at the TIF district in our downtown area. That one has done very well and continues to do well. We’ve seen things happen downtown that would never have happened otherwise. TIFs still can provide important benefits.”

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