Village Moving Ahead on Study for Downtown TIF District
Aug 20, 2015 08:42PM
● By Steven Jack
The village of Oswego will host a TIF District meeting this Thursday at 6 p.m. at Village Hall.
It’s been over 5 years since the last time it was discussed in Oswego, but the possibility of a tax increment finance district to help jump-start development downtown has returned.
Village trustees earlier this week gave the go-ahead to village staff to begin the process of hiring a TIF consultant to study the feasibility of such a district in the downtown. The village is likely to contract with Chicago firm Kane McKenna and Associates on the study. The cost of the study is not yet known.
Tax increment financing spurs redevelopment in blighted or underdeveloped areas by using future property taxes resulting from new construction or capital improvements. Property taxes generated prior to the creation of the TIF district — the base level — continue to be distributed to local taxing bodies at the same amount.
The gradual growth in tax revenue above the base level — the increment — is used for redevelopment as property values rise. TIF funds may repay borrowing done by the municipality to finance redevelopment within the district, or they may finance improvements only as new revenue is generated.
The two main arguments against the creation of TIF districts are that they can be used to incentivize private developers with public funds and that they freeze the amount of annual tax revenue that other taxing bodies can receive for the duration of the district, which can be as long as 23 years.
In 2010, developers Harold Oliver and Angelo Kleronomos proposed unsuccessfully to build retail and residential units on the Alexander Lumber land in the downtown. That plan called for the creation of a downtown TIF District to help fund infrastructure improvements for the $44 million project. With not enough support from the Oswego Village Board the TIF was never created and the proposed development deal collapsed.
“This whole notion that public money just goes into the pockets of developers is just not true,” said Village President Gail Johnson. “If a developer wants to front money for public improvements that are the village’s to make and we pay them back out of the TIF fund, is that putting money in the developers pocket? I don’t think it is.”
Johnson said her vision for a downtown TIF is one that is very basic. Funds captured from increased taxes due to redevelopment would be used to fund public infrastructure work such as needed improvements to streets and village-owned utilities like water and sewer lines. She said there is currently no developer with a plan to request TIF funding for private development.
“There is a case to be made for incentives and I believe in using them in a very limited case-by-case basis,” Johnson said. “There is no one waiting for TIF funds from the village.”
Village Trustee Scott Volpe, who in the past has stated his objection to using public money to provide incentives for private development, said he’s “disappointed” the village is considering a TIF for the downtown.
“I think there are other alternatives to consider, and I don’t think we’ve considered those yet,” he said.
Further, Volpe said establishing a TIF district will be a detriment to School District 308 because increased property tax revenue in the TIF will not be available to the school district through the duration of the TIF.
“I don’t think this is a wise way for us to partner with our school district,” he said. “… Our residents should be opposed to diverting tax dollars to developers from school children.”
Johnson said that’s simply not the case and that school district won’t lose money from the TIF creation, and in fact will see increased revenue upon its completion.
“The majority of the School Board knows that commercial growth along with residential is needed to bring more revenue to the School District,” she said. “I don’t anticipate a big fight with the School District about this.”
If a TIF district is to be created in downtown Oswego, it will be several months away. First, the feasibility study needs to be completed and public meetings with all local taxing bodies will need to be held, and the Village Board will be required to take a final vote on its creation.