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The Berwyn City Council voted 6-2 at a recent meeting to oppose tax increment financing reforms proposed in a state Senate bill.
Berwyn has four TIF districts. The four TIFs have generated more than $30 million since 1997, according to a 2019 TIF financial report posted on the Berwyn Development Corp.’s website. The BDC is both funded by and oversees TIF funds.
Senate Bill 2298 seeks to limit the lifespan of a TIF to a decade, with a possible extension to 15 years. Currently, TIFs can last more than 20 years, with a possible extension to 35 more years.
In a TIF district, property taxes are frozen for the life of the TIF, starting with the year the city council approves it. The property taxes the TIF does pay go into a special fund to be used to foster further development.
The philosophy behind TIFs is that the tax break attracts development that will increase the district’s property value and eventually the property taxes it pays once the TIF expires. To be declared a TIF, properties have to meet statutory requirements for blight and economic distress.
In addition to shortening the term of TIFs, the reform bill states TIF neighborhoods must have an average unemployment rate of at least 120% of Illinois’ annual average, among other stipulations.
Voting against the resolution opposing TIF reform were Aldermen Joseph Carmichael (8th Ward) and Robert Pabon (5th). Voting for the resolution citing the city’s official condemnation of the reform bill were Aldermen Scott Lennon (1st), James Woywood (2nd), Richard Leja (3rd), Robert Fejt (4th), Alicia Ruiz (5th) and Mary Beth Arenella (7th).
Berwyn’s TIFs are:
• The Roosevelt Road TIF, which started in 1997. Its 2019 financial report listed $592,219 in TIF earnings for 2019 and about $9 million since its inception.
• The Depot District TIF, which also started in 1997. It has brought in more than $18.4 million, according to the BDC’s 2019 report.
• The Harlem Avenue TIF, which started in 2011. According to the 2019 report, this TIF has brought in more than $4.4 million over its lifetime and is now $217,212 in the red.
• The Ridgeland Avenue TIF, which was largely eliminated when the City Council agreed to strip TIF status from Kasper Development’s proposed 29-home development. Minus the housing development, the Ridgeland TIF includes Freedom Middle School and a Burlington Northern Santa Fe railroad building – neither of which pays property taxes – and the old Physicians Records property, which pays property taxes. There is no financial information about the Ridgeland TIF on the BDC’s website.
“Essentially, this [bill] would render a tax incremental location redevelopment act worthless for nearly all larger or complicated redevelopment projects,” BDC Executive Director David Hulseberg said.
The bill also would “significantly impact the ability to leverage future generations of incremental taxes to pay for development project costs,” Hulseberg said.
Only Pabon and Ruiz spoke before voting.
“Any time we have the opportunity to reform market-centered mechanisms that take public funding and redirect it for private development or investment, we need to act,” Pabon said. “SB 2298 is a start when it comes to reining in the power that big development and big real estate have in our state. We have become overreliant on this strategy that takes funding from schools, parks and libraries on a gamble that we’ll see improvement, not even a guarantee. It would stop TIFs that last for decades without the taxing bodies they redirect funds from seeing any return on investment.”
Ruiz was the lone council member to speak in favor of the resolution opposing reform. She first pointed out that she was a member of the American Planning Association’s Illinois chapter, one of many regional and statewide business and commerce organizations opposing the bill.
“I really do believe it’s time for reform. Every article I read and every[thing] that they teach me in my master’s program, it is proven that TIFs are abused, historically have not benefited communities, and have created disparities and inequalities since they’ve existed,” Ruiz said. “But I don’t agree with the reform that they’re suggesting at this time because I believe the poverty level [set in the bill’s amended blight definition] will bring bigger problems than solutions.”
In addition to the unemployment rate stipulation, the bill would require at least 50% of children in proposed TIF districts participate in federal free lunch programs or that 20% or more of households in the redevelopment project area receive food stamps.
“But 25, 35 years is way too long [for TIFs],” Ruiz said. “I do not believe that we are using this tool to the best of its ability to serve our community, to ensure that we’re being inclusive and equitable. And if you don’t agree with me, I highly suggest one day that everyone take a ride from north to south and the south to north and see the difference in our community. There is a huge gap in our community between north and south, and that gap continues to grow based on the decisions that we make here.
“But I don’t agree with all of this bill, so I can’t support it,” Ruiz said. “And I implore my colleagues to start looking at this through a more inclusive, equitable lens.”