DeKALB – Bill Nicklas still has a Q&A sheet he wrote from 1983 about tax increment financing when he worked for his boss, former DeKalb City Manager Mark Stevens.
The sheet was meant to educate residents about TIF districts before the city pursued creating its first one in 1986. Now the city manager himself, Nicklas is set to lead the city into a third TIF era, and he is clearing up some concerns along the way, including why he thinks the city needs a TIF district now more than ever.
“Does the city of DeKalb have sources of capital revenue recurring every year?” Nicklas pondered in his office Thursday evening. “The answer is no. In fact, the answer is emphatically no. We scarcely have enough money to fill our potholes right now.”
On Monday, the City Council likely will vote in favor of what is being called
TIF 3. The TIF district will encompass only the central business district on Lincoln Highway, which covers west of First Street to just before 14th Street.
TIF 3 passed after its first reading by a
6-2 vote Nov. 13, and it has gained support from previously discontented taxing bodies from the Joint Review Board.
“[TIF] is tied to the idea that there is something very seriously wrong with a number of things,” Nicklas said. “Infrastructure, maybe the roads are crumbling, the water mains are 80 years old, buildings are too close together, there are fire hazards.”
According to the Illinois TIF Act, certain characteristics – such as the ones Nicklas described – must define what properties are eligible to be included in a district.
A consultant comes – the city hired S.B. Friedman Development Advisors of Chicago – and conducts a months-long feasibility study by gathering photos, property values, calculating projections on increment and evaluating and identifying potential projects for TIF funds.
Imperative in the city’s decision to create TIF 3 is the fact that because it’s tax season, DeKalb County assessors will reassess property values by mid-February for the 2019-20 tax season.
“Some will get worse, some will get better,” Nicklas said. “So if we don’t do the TIF, we have to start all over again [with the study].”
Nicklas recalled working on the DeKalb-Pond-Fisk project in the 1980s, and when the city gave TIF money to developer John Pappas for the Cornerstone project and Plaza DeKalb.
“The job’s not done,” he said. “If we look back now with perfect hindsight, [the city] could have been more aggressive tackling problems in a shorter time frame.”
TIF 3 will be significantly smaller than the other two (about one-tenth of the size of TIF 1), paving the way for what Nicklas hopes will be a slew of redevelopment projects downtown.
“It’s been the city’s position recently that we want to aggressively go after redevelopment,” Nicklas said.
The city also will not be pursing a surplus sharing agreement with countywide taxing bodies, something it has done for both TIF 1 and 2.
“I guess in good faith we wanted to keep [TIF 3 boundaries] pretty tight,” Nicklas said. “It’s going to take quite a while, compared to TIF 1, to generate the kind of money you would need to redevelop some of these properties in TIF 3. So if we’re sharing half of that, we’re probably not going to have the same impact as we could.”
A number of taxing bodies have said they will not pursue an agreement with the city regarding TIF 3, either, and that they wish to close TIF 1 a year early. Since some of TIF 1 overlaps with TIF 3, closing the first TIF early would mean taxing bodies could independently collect more revenue from properties that have been sharing their tax revenue since 1986, when TIF 1 was created. Taxing bodies then can collect revenue based on that higher assessment, a factor that also would affect TIF 3.
“Closing TIF 1 would bring the [estimated assessed value] back on our tax rolls one or two years early,” DeKalb School District 428 Superintendent Jamie Craven has said.
DeKalb Park District Board President Phil Young also said the board would support closing TIF 1 early. The City Council ultimately has the final say in the matter, although as Nicklas pointed out, he wants agencies to be aware they have a “voice in the matter.”
The city also has taken steps to create what is known as Chapter 37, a new ordinance that will impose a series of strict regulations on the city’s operations regarding TIF districts. This will address months of concerns from taxing bodies that since August have cried foul regarding the city’s handling of TIF records, leading to a forensic audit. Looking forward from 1986 to now, Nicklas strongly feels a third TIF district is the way to go.
“[TIF] is not inherently good or bad,” he said. “It’s a vehicle that allows, under restricted circumstances, for home rule communities to raise a fund with the trust and collaboration of the other taxing bodies for specific redevelopment.”