TIF District

[kprsn1]

Hey guys how about some input? I was up in the Effingham/Teutopolis area yesterday and saw in a news pamphlet that Effingham was getting a new fire station from TIF district funds. Salem and Centralia have TIF districts. I think Salem Fire has received some TIF funding but I don't think Centralia Fire has benefitted yet (don't qoute me on either one though). Sandoval is considering setting one up. Any thoughts? Pros, cons? Keep in mind Sandoval is a small community so would it work or work as well as it does in other communities or larger communities?

Chad

[codeblue81]

I know that the TIF districts in Effingham are are taking alot of money away from the General Fund of the city. I believe that there are 3 or 4 TIFs in the city and the tax money from those districts don't go to the General Fund....making it harder for the city to run. Yeah its brought in a couple of new businesses and is helping to pay for a new central fire station but it's also draining the city budget. It's a win/lose situtation. I haven't heard of a small town like your's having a TIF district. I'd have the city council do some hard-core research for town's that have had them and then get into contact with them to see if they work. Good Luck.

code_blue81

[ChiefReason]

It is my experience that, unless the TIF includes the school district and the fire district, they suffer the worst under a TIF. Why? Because to include both, the TIF would be the same geographical size of the existing tax bodies. No advantage. Where TIF gets its steam is by designating an enterprise zone or a downtown distict as TIF. Any tax money generated during that time has to go back into the TIF for the life of the TIF. Which means that, if the enterprise zone is making a small fortune, the school district and the fire district only get the income from the pre-TIF. So, if the pre-TIF was, say, $5000 to the fire district and the TIF is now generating the equivalent of oh, let's say, $20,000, the fire district only gets the $5000. The other $15,000 goes back into the TIF district.
In a word; I HATE TIFs. It's great if you are a businessman. It puts the risk of starting a new business in a TIF on the shoulders of the city's taxpayers. That's the down side. On the up side, it is generating money; but it goes right back into the TIF district and can't be used for anything else. In a way, it is bankrolling the TIF, but is not helping the general fund in any way.
We can do without TIFs. Anyway, the original intent of TIF was to eliminate "urban blight". How many rural communities that you know of have "urban blight"? TIF is being abused.
Did I mention that I hate TIFs?
CR

[pcfdcap1]

Pearl City enacted their TIF 7+ years ago. The TIF was formed to upgrade infrastructure(which, according to the TIF law, is what the funding should be used for, along with incentives for business within the TIF). While exploring the idea for the district, several meetings and public hearings were held. Representation from the different taxing bodies to be effected was sparse. An agreement with the school district was made in that the district would receive their taxes as if there was no TIF. At the hearing to vote, there were reps from 5 taxing bodies present. According to law at the time, the 3 taxing bodies that have the largest levies were allowed to vote plus one member from the general public. I was on the Park Dist board however, I was invited at the public at large. The vote was 5-0 in favor of the concept and 4-1 to enact. In the 7+ years, the school is in the top 10% for state report card on financial stability. Enrollment has increased 20%. In the 2nd year the village upgraded the sanitary and storm sewer systems. Water mains have all been upgraded. Water storage has tripled. This helped drop our ISO rating to 6 from 8 in the village and 9 to 8 til the 5 mile rule. Since then, agreements were made to assist the Library Dist and the Township. Most of the citizens disagreed with helping those taxing bodies however(that's for a future post)3 boarded up business buildings were torn down and lots resold. 3 new subdivisions were started with 90% occupancy and a 4th just started. here is funding available to the Park Dist. if needed. There is funding for no cost land and funding for the building to go on if our fire trustees get off their a** or die or get voted out. There has been NO single business take advantage of extea funding yet.
In a nutshell, I'm and have been in favor of our TIF.
There are other small villages in the area that haven't been successful. If done right everyone can benefit. Let's not forget, at the end of the life of the TIF(up to 23 years), the other taxing bodies will benefit with both funding, and the higher property values.

[jboczek]

Chad, TIFs are good and bad. If Sandoval starts talking about one, get the fire district in on the very first and every meeting after that. Yes, you can get money from a TIF but you have to ask for it up front and justify what and why you want it. Get your request in early and follow it up. Don't endorse the TIF until they promise to give the fire district some money out of it. Don't wait until after its formed since you won't be included in any financial arrangements. Somebody needs to attend every meeting from day one and insist on the funding.

[ChiefReason]

I've heard of this!

PC:
I have heard some TIF success stories. Unfortunately, our's is not one of them.
Here's what happened: A shyster developer came to town promising prosperity in the form of a housing development if we would give him incentives and create a TIF district. So the village, formed a TIF that included the site of the housing development AND the entire downtown business district. It was several months before any work at the site started but when it did, I believe that it would set the tone for the entire project. A worker was killed in a trench collapse while installing sewer line. Our fire department responded. The developer tried to claim that the work was subcontracted. The subcontractor claimed that the worker was also subcontracted. By the time it was all sorted out, the subcontractor was fined and sent to jail and the developer has not been heard from since. Now, we are stuck with a development project that isn't developing AND the business district is tied to a TIF agreement that I don't think can be rescinded. If someone knows how, please let me know.
I will not support a TIF in the future under any circumstances.
CR

[Dalmatian90]

If done right everyone can benefit. Let's not forget, at the end of the life of the TIF(up to 23 years), the other taxing bodies will benefit with both funding, and the higher property values.


Competetion for businesses based on tax incentives is very, very poor public policy. It reduces the benefits to all, and concentrates them where someone is willing to take the biggest loss.

Guess what? The greatest value to those commercial & industrial buildings is in the first 20 years or so.

Then the companies that went looking for the cheapest space in the first part come with a three-part excuse:
1) We've grown
2) The building will cost too much to renovate
3) They're gonna give us a great tax break for building our new building over the state line! See ya!
Leaving the host community with deteriotated building that becomes host, eventually, to second and third rate companies.

Many times these deals are aimed at large national corporations, who get deep tax breaks. The thought being they'll employee people, who'll spend money at smaller local businesses...so you can tax the citizens & local business people at 100% while only taxing the big company at 50% and still gain revenue! Anyone see a problem with that logic? It's one of those governance issues where what makes financial sense doesn't necessarily make public policy sense.

I'm sure there are many success stories out there of tax incentives producing local improvements. But those local gains come at the cost of the state, neighboring states, and the nation in general.

That's my story and I'm sticking with it.
Matt

[pcfdcap1]

Art,
I remember the trench accident down there now that you mention it. The individual was from just down the road from me. He was employed by a large, very well known contractor in the area. There was a dispute as to whether he was scabbing this job, subcontracting the job for the company that disappeared or working on his own. Someday the truth will come out. As far as what can be done, I will email you the phone number and address of the TIF lawyer that Pearl City uses. This law firm should be able to answer your questions.
Our TIF was set up for the benefit of new home builders as well as cleaning up the downtown. In the agreement, those buying and building on a lot in the new subdivision would be reimbursed the cost of their lot after their home was built. The developer made his money on the mark-up from land price to lot price. Any lots not sole in the first 12 months, the developer actually reimbursed the individual their lot price when their home was built. There was a subdivision ordinance passed before the first shovel was turned. The developer was responsible for all water and sewer(which had to be up to specs and inspected before accepted) within the subdivision. To date, no business has received a cent from the TIF. One restaruant owner will be receiving some funding for extensive remodeling and structure work done to his building.
More later
Mike

[kprsn1]

Thanks

Thanks for your input guys. I've spoken to our Chief and let him know some of the comments that you've made and suggested that we had better keep our noses in the process. Our Chief has already attended the TIF planning meetings and is going to stay involved. One of the good things is that a village board member is a department supporter and the mayor has reportedly said that one of his first priorities is sending some of the money our way. Time will tell but me personally, I can't see our community really bringing in enough from the TIF to make a whole lot of difference but every little bit helps. Good news though, rumor has it a Dollar General store is coming to town. Could the TIF talk be making a difference already? Who knows but maybe this is the start of good things to come!

Chad