By Ted Schnell • BocaJump | Thursday, April 26, 2012
Elgin officials were informed by Kane County that incremental revenues in the city’s Central Area Tax Increment Financing District will be $400,000 less than originally estimated.
The City Council learned of the drop during its special committee of the whole meeting on Wednesday afternoon, when the council met to discuss an array of issues they would like to address in the coming year.
Assistant City Manager Rick Kozal said the incremental revenues from the Central TIF District totaled $4.3 million in 2011. In light of the declines in other revenue streams, the city had adjusted its budget for Central Area TIF revenues downward to $4 million in 2012.
It wasn’t enough. Kozal said Kane County has indicated the Central Area TIF District will generate just $3.6 million in incremental revenue this year.
It’s a tough blow.
The Central Area TIF District revenues have been used to fund millions of dollars of infrastructure improvements in the downtown area, including about $1 million in the ArtSpace project whose construction began in the fall.
In a TIF district, property taxes are frozen at a baseline level for as long as 23 years for the purpose of revenue distribution. As property values in the TIF district rise, the increase in tax revenues, or increment, is used to fund such things as infrastructure improvements, redevelopment and even organizations such as the Downtown Neighborhood Association.
Last year, the Downtown Neighborhood Association proposed it be funded through the Central Area TIF District instead of from the city’s general fund. City officials praised the proposal last summer as far-sighted and further welcomed the move in light of a $4.5 million structural deficit projection that by the fall had ballooned to as much as $13 million.
The Downtown Neighborhood Association intends to use $130,000 a year in TIF money to fund its program through 2015, with an eye toward establishing a special assessment area to provide ongoing funding for the organization beginning in 2016.
The impact of the $400,000 drop in TIF revenues is unclear at this point, Kozal said. The city will be looking at its funding options for the Central Area TIF District, including researching the mechanics of a state law that allows money to be borrowed from an adjoining TIF district, such as the Route 20 TIF District.That district was created when John B. Sanfilippo & Son Inc. was considering moving its headquarters to a portion of the Elgin Mental Health Center property. The company, however, chose another location in Elgin. In light of the drop in the pace of business development in the aftermath of the Great Recession, Kozal said borrowing from the Route 20 TIF may be a good option.