DeKalb TIF Absurdity

Wow, today’s Chronicle article about TIF seems very one-sided and in need of additional viewpoints.

That’s what blogs are for!

Let’s start with the statement about Sycamore Road.

DeKalb’s districts helped revitalize Sycamore Road with the additions of Target, Walmart and major shopping corridors.

Revitalize? Do they think Sycamore Road was full of slums? It was mostly farmland. Last I checked, farmland was an asset in DeKalb County. But, to start a TIF district you need to declare the area you want to develop as a sort of disaster area known as “blight.” In Illinois TIF parlance, “blight” is anything a municipality needs it to be, as long as it can persuade the General Assembly and governor to buy in. So…corn fields equal blight in DeKalb.

Yes, it’s a corruption of TIF; and the most amazing part, to me, is how a publication can write about Illinois corruption on a regular basis and yet not recognize local examples of it.

Back to the article. How about this:

“We’re blessed to have the working relationship we do with the taxing districts,” [DeKalb city manager Mark] Biernacki said. “We work to make that longer term more short-term by ending TIF districts in less than 23 years.”

DeKalb’s largest TIF district was amended, expanded and renewed for an additional 11 years in 2008. This assertion of Biernacki’s that DeKalb closes TIFs early should not have gone unchallenged, yet it totally did.

Also going unchallenged is the notion of opening new TIFs in town AT THIS TIME. I can’t believe we are going there and will spend the rest of the post explaining why it we shouldn’t.

Just this past Monday, the smartest city council member asked whether TIF revenues might slip under the baseline amounts required to yield increments for the city’s TIF funds, and the city manager admitted it is possible.

If it happens, we’ll be scrambling. Here’s why:

Problem One: EAV is still falling. If the trend continues, a) new TIF districts will not generate revenue for redevelopment and b) adjoining TIF districts will not have the cash to provide infusions to save them. Most importantly, the city could reach a point where it will not be able to collect enough of an increment to service its TIF debt, which is General Obligation (GO) debt. (In fact, if you can’t envision this possibility I suggest you look at the last few TIF 1 budgets.) There is no defaulting on GO debt; it is guaranteed by raising taxes, usually property taxes, as high as they need to go to cover the obligations.

Problem Two: DeKalb already has been raising property tax rates every year. The City of DeKalb collects property taxes to fund pensions and can’t keep up, even with annual rate increases. It is digging ever more deeply into operating funds to make its pension payments.

Problem Three: Sales and income taxes are running flat. There’s no growth in these core revenues, and besides the pension pressures we’ll soon have to start setting aside funds for police station construction. It’s unlikely that the General Fund could cover TIF debt obligations if the TIFs do end up under-performing in a major way.

Problem Four: Possible new spending. Despite the above-mentioned revenue problems, the city is currently considering a multi-million-dollar bond commitment for a library expansion that would go on the TIF tab.

It’s a potentially explosive mix of fiscal factors, rendering the hope or intention of opening new TIF districts here an absurd and irresponsible proposition for the time being.