Suburban TIF districts collect $300 million in property taxes

For the past 23 years, the vast majority of property tax revenue generated within the boundaries of the Brewster Creek Business Park in Bartlett paid for infrastructure improvements there.

That amounted to nearly $70 million since 2000, including $7.7 million in 2022, according to village financial reports.

But next year, that property tax revenue is set to shift back to nearly a dozen underlying local governments like Elgin Area School District U-46, the Bartlett Fire Protection District, DuPage County and other taxing bodies as Bartlett village officials plan to retire a tax increment financing (TIF) district next month that helped convert an old gravel quarry into a thriving commercial asset.

"This has been one of the most successful TIFs in the state," said Tony Fradin, Bartlett's economic development director. "The taxing districts within the village are very eagerly anticipating collecting the added revenue."

In addition to the property tax revenues used to develop the business park, another $240 million in private investment funds were spent there during the TIF district's life span, records show. Fradin said the reports don't take into account the millions of dollars more that were spent to develop adjacent to Brewster Creek to support the needs of the 7,000-plus people who work there daily.

"There's tens of millions more coming post-TIF," Fradin said of additional economic development deals in the works in and around the business park.

The Bartlett Quarry TIF is one of 170 such special taxing districts in 64 suburbs that collected nearly $300 million in property taxes in 2022, according to a Daily Herald analysis of state-mandated annual financial reports for the district. It's only one of a few that is coming to an end, though. Another 14 TIFs are so new that they haven't begun collecting tax revenue yet, the reports to the Illinois comptroller's office show.

"The scrutiny of TIF districts is really important because often they don't produce the results that they're touted for and sometimes produce very little in the way of results," said David Merriman, interim director of the University of Illinois' Institute of Government and Public Affairs. "In many instances, TIFs can shift the tax burden and are used to give subsidies to developers without sufficient transparency or quid pro quo for the subsidies."

He also complained that reporting requirements for spending are lacking. He suggested private developers and public agencies should be required to detail how money was spent within the district.

The comptroller's reports are limited by what information the legislature mandated be included and don't require detailed spending.

It's often unknown how public funds were spent. Some towns, like Wood Dale, have even ignored filing the reports with the state. Wood Dale officials did not respond to requests for information about the missing reports.

"How the money was spent is often something we don't have good data on," Merriman lamented.

A TIF district works by freezing the assessed value of properties within the district for other taxing bodies while allowing a municipality to collect any additional property tax revenue derived from an increase in the value of the land over the 23-year life span of the TIF. The tax revenue generated by that increase must be spent on infrastructure or building improvements within the TIF, something developers would normally have to cover otherwise.

Properties within a proposed TIF district also generally have to be considered "blighted" to be eligible.

Since their inception, the 170 suburban TIFs have generated more than $1.3 billion in property tax revenues, financial records show.

"It's hard to discuss TIFs on an average basis because there's not an average TIF, there's a bunch of different ways to go about doing them," said Chris Goodman, associate professor of public administration at Northern Illinois University. "One of the better ways to judge whether a TIF is working is whether it's generating surplus revenue. If you're generating more revenue than you're sending out, then in theory that's a success."

But Merriman said gauging success can be tricky. Oftentimes, municipalities will borrow millions of dollars, assuming successful redevelopment within the TIF will eventually generate the property tax revenue to pay off those loans.

"It all depends on how much risk these municipal governments want to take on," he said.

Financial uncertainty seemingly fueled TIF creation.

In the wake of the Great Recession that ended in late 2009, several suburbs created new TIF districts, state records show. Between 2011 and 2016, 56 of the current 170 suburban TIF districts were created.

At the outset of the pandemic in 2020, 12 new TIFs were created. The most in a single year dating back to 1997.

Two of the oldest suburban TIFs are also coming to an end soon. The Batavia Riverfront TIF, created in 1989 and extended for another 12 years, is being retired, city officials said. It generated $15.2 million during its lifetime in property taxes and another $22 million in private investments, according to financial reports.

Libertyville's Downtown TIF was created during Ronald Reagan's second presidential term in 1986. It finally ended this year as well.

The village and underlying taxing districts previously agreed to extend the district another 12 years to help cover the cost of "parking improvements," village officials said. Meanwhile, the village agreed to pay the underlying taxing districts, like Libertyville High School District 128, 70% of what the school district was due from the increase in property tax revenues within the TIF during the extension.

"We got about $1 million each year," said Dan Stanley, District 128's assistant superintendent of finance. "Last spring, we received our last check from the village. Going forward we'll get the full amount."

Merriman said he is leery about designating downtown areas as TIF districts.

"It's downtown, so there's lots of money that's been invested already, and you'd expect a lot of money to be invested there. Why are you subsidizing it?" He criticized.

Several suburbs have recently turned mall properties into TIF districts, but those efforts don't appear to be generating much additional revenue. Aurora's Fox Valley Mall TIF began in 2020 and has generated just $84,393 so far. Bloomingdale's Stratford Square Mall TIF district has generated $39,745 since 2019. Northbrook Court's TIF has generated $219,156 since 2019.

Carpentersville's Spring Hill Mall TIF, created in 2016, was so unsuccessful that village leaders terminated it in 2021 and approved a larger TIF district in 2022. No report for that district is available yet.