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Editorials

Our view: DeKalb just can't kick TIF habit

Demolition of the back of the building at 122 South First St. in DeKalb, former home of Barb City Bagels, gets underway Tuesday. Tim Hays, owner of Barb City Bagels, has said his shop will reopen in the Cornerstone building around the corner in the upcoming weeks.
Demolition of the back of the building at 122 South First St. in DeKalb, former home of Barb City Bagels, gets underway Tuesday. Tim Hays, owner of Barb City Bagels, has said his shop will reopen in the Cornerstone building around the corner in the upcoming weeks.

Old habits die hard, and the city of DeKalb’s habit of relying on tax increment financing dollars to meet its needs is no exception.

The city has used tax increment financing as a vehicle to encourage development since 1986, when it created its “central area TIF," which has continued the past 32 years and will expire in 2022. This district includes downtown, industrial property near the Pleasant Street neighborhood, and some commercial property on Sycamore Road, and some residential property north of downtown.

In 1995, the city created a second special taxing district, which includes most of the commercial property south of Lincoln Highway, in effect putting almost all of the city’s commercial property under tax increment financing.The second district, which generates considerably less money, will expire at the end of the year.

Over the years, these two special districts, which accumulate cash by diverting revenue from local schools, parks, county government and other taxing bodies, have generated more than $200 million for the City Council to spend on projects.

Some organizations have come to depend on this money. Barb City Manor, a city-owned facility housing seniors 62 and older at 680 Haish Blvd., has relied on the funds for its upkeep and improvement. The Egyptian Theatre receives about $100,000 a year in TIF funds for capital projects and also has had big-ticket renovations such as the installation of a new sprinkler system (at a cost of more than $470,000) to keep the historic venue up to state fire code. The new project on the wish list is an air-conditioning system that will cost an estimated $2.5 million to $3 million.

City government may be most dependent of all. For years, TIF dollars provided the only source of funding for road repairs. The city routinely used $1.4 million or more a year to cover administrative costs – a practice that School District 428 officials say might not have been a legitimate use of the money.

The TIF dollars have also given the council considerable spending power. In recent years, the council awarded $1.5 million to a Brian Bemis Toyota (under threat of their moving to Sycamore). They have given assistance to downtown development including $468,000 to Sundog IT to renovate a Lincoln Highway building for its new location, and almost $5 million combined to help developer John Pappas create the Cornerstone and Plaza DeKalb mixed-use developments downtown on Lincoln Highway.

Those last three properties would also be included in a new tax-increment financing district the city wants to create, which would include property along Lincoln Highway from Seventh Street west to the Pearl Street, and a couple of blocks north and south. City officials say the area has momentum thanks to large recent investments and the best way to continue it is to keep the cash spigot open.

There is unfinished business in the area, notably the vacant property west of First Street on Lincoln Highway which is owned by developer Shodeen. Mayor Jerry Smith has said the city also must do something about its aging municipal building, which opened in 1967 and no longer suits its needs.

We want DeKalb to thrive, and if a new TIF can make it happen, so be it. But some properties have been under TIF for years and have declined in value.

That is not progress.

DeKalb's two TIF districts generate $6 million to $8 million a year – money that is not going to local government. If it did, it's possible taxes in the city would be less – and many property owners are desperate for tax relief.

If there is to be a new TIF district, city officials must ensure future projects have public benefits beyond paying administrators at city hall. Redevelopment plans should be achievable.

City officials will have to prove why 23 more years of tax increment financing is a good deal for the taxpayers who will make up the difference for the money TIF withholds from local government.

It's the taxpayers who make up the difference for the money that's diverted from their local governments. There must be tangible public benefit to any future TIF.

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