Frequently-asked questions concerning TIF districts, especially the two in Warrenville, are as follows:
• There’s no such thing as a free lunch, so when do we pay and will we be able to afford it then?
• If increased property values are the end result to TIF residents, won’t taxes soar in the future when the TIFs end?
• Will development frenzy occur and change the face of the community in undesirable ways?
• If the TIF’s work well, is someone getting rich? And at what eventual cost to Warrenville taxpayers?
• Who really controls the TIF’s? Is the community in control of its own destiny or is control ceded to outsiders?
• There is talk of internal loans to the partners of TIFs. Do these loans accrue at market-based interest rates or do they become large and unmanageable? Who really pays for these in the end?
• Will TIF traffic eventually smother the city or help it?
We have asked others in the community to respond to these questions, so that full representation of differing views is provided. We intend a healthy discussion to occur; that is, discussion stemming from legitimate questions with answers that are to the point—not spin. In this manner, baseless fears will be dispelled, and a true understanding of TIF can be brought about.
We begin by examining the first question. The 23-year TIF development period is a common feature of TIF legislation. Some communities end a TIF early if developments have progressed quickly. Some, however, find it advantageous to continue development work and have extended the original TIF. Still others have added another TIF district in an overlay fashion because new development opportunities have arisen during the life of the original TIF district. These time frames underscore the difficulty of some projects and the need for long periods of time to make good things happen.
During a TIF’s life, however long, taxes collected (property taxes or sales taxes, or both, depending on the type of TIF district) are not spendable in the normal fashion. These tax revenues must be spent in accordance with the TIF statutes.
In the case of TIF 1 at Cantera in Warrenville, the monies can be spent only for development costs of the land, capital improvements, or administrative costs of the TIF itself (accounting, auditing, legal and supervisory costs, for example).
Warrenville’s TIF #2 abuts TIF 1 and funds from TIF 1 can be used in TIF #2 for civic capital improvements such as the new city hall, library expansion, park district Recreation Center, police department, public service garage, etc.
While those uses are positive and help civic institutions operate economically in the future (lower maintenance and utility costs, for example), operating expenses of those entities go on as before, often rising as due to increased population in the developed TIF area. The city cannot forward operating funds to those taxing districts for operational purposes. Only capital improvements can be covered by TIF funds.
For 23 years those taxing districts live without the growing tax revenues that would otherwise be theirs. That causes residents to either pay higher taxes to those districts for increasing costs, or live with restricted budgets and services and higher service fees.
Some people call this an “opportunity cost” for long-term benefit. Others call it torture.
