In my last post, I explored how Tax Increment Financing (TIF) dollars for FY2016 were budgeted versus actual spending. This time I hope to explain the discrepancies, at least partially.
TIF districts have their own budgets in their own funds that are separate from the city’s general operating fund called the General Fund. DeKalb currently has two active TIF districts/funds, TIF 1 (AKA Central Area TIF) and TIF 2.
To summarize the situation: For FY2016, $1 million was budgeted for street construction/reconstruction in TIF 1. However, in the budget narrative for the half-year budget called FY2016.5, staff reported that they “[f]unded street improvements in the amount of $600,000” in FY2016, and in the annual TIF report to the state for that fiscal year, it was revealed that less than $75,000 was actually spent for street improvements out of that fund.
How do you go from $1 million budgeted to $600,000 reported to $75,000 spent? I’m going to chalk up the $600,000 to ineptitude, but here are some facts as gathered from Freedom of Information Act requests:
— A budget amendment passed February 22, 2016, applied to both TIF district budgets. The $1 million originally budgeted in TIF 1 for street construction/reconstruction was re-allocated into sidewalk maintenance and street maintenance in both TIF 1 and TIF 2 districts. TIF 1 got $600,000 for these purposes, and TIF 2 got $400,000.
— During a special meeting of the city council on March 17, 2016, the city granted an economic development incentive of TIF money equaling $1.5 million to the company that owns Brian Bemis Toyota, whose property lies in TIF 1. However, in this instance, there was no corresponding budget amendment made.
Why was passage of a formal budget amendment included in the February re-allocation but not the March incentive, which apparently eliminated the allocations for street improvements? I was able to ask that during the annual TIF Joint Review Board meeting last month, and city staff said it’s because the city doesn’t have to pass amendments in a TIF fund as long as the re-allocation doesn’t add to the overall spending in the fund.
Specifically, then, the February streets re-allocation resulted in additional TIF 2 spending so it required an amendment, but the incentive handed out one month later wasn’t planned to add to TIF spending at all, and therefore did not require an amendment.
Got that? City of DeKalb can budget $1 million for streets out of TIF funds, and then spend it on something else entirely without telling us what we sacrificed.
And not only was there no budget amendment, it looks like council was complicit in the exclusionary detailing of the deal. According to meeting minutes, not one council member asked what we had to give up out of the TIF funds to afford the gift to Bemis. Mind you, council actually discussed the resolution twice, during its regular meeting on March 14, and again during a special meeting when it passed the resolution March 17. But the best anyone came up with during either meeting was something like, “Whew! No impact on the General Fund! I’m in!”
That’s some restaurant-quality misdirection there.
For this fiscal year, TIF 1 has a budget of $500,000 for street maintenance, and $500,000 for street construction/reconstruction. TIF 2 has a budget of $500,000 for street reconstruction. But I figure they will probably give the streets money to the Egyptian or the STEAM center instead, and just not say anything. It’s worked pretty well so far.