The draft report of the many-membered Property Tax Relief Task Force has things to say about Tax Increment Financing Districts.

The TIF Section:

Skipping to another section below on the subject.

TIF Subcommittee Recommendations:

= = = = =

Our rsesident expert in Tax Increment Financing Districts, Woodstock’s Susan Handelsman’s observations:

TIF section of report contained 3 suggestions:

1. Shorten lifespan to 10-15 years.
2. Require objective standards to define “blight” and “but-for”.
3. Increased transparency.

1. Shorten lifespan to 10-15 years.

• Shorter lifespan (from 35 years or more current legal TIF lifespan) is probably non-starter.
• TIF bonds are typically 20 year duration.
• TIF typically gives gifts to developers worth 30% of project cost.

Often this gift is financed by taxpayer-guaranteed public debt.

Interest rates on such debt often exceeds the property tax rate (although in Woodstock the property tax rate is so high it may exceed muni bond yields).

So, a 15 year TIF could barely keep up with interest payments on public debt.

Then, when TIF expires, the full principal that public debt is fully the problem of the community taxpayers.

TIF is a taxpayer protection evasion mechanism.

It enables municipalities to increase taxes in a way not allowed under Illinois statutes, by virtue of prestidigitation “when is a tax not a tax? When it’s a ______” fill in the blank TIF in this case.

Illinois still has a few taxpayer protections and one is percentage of public debt relative to value of taxable property.

15 year TIFs will simply shift the taxpayer protection evasion from one mechanism to another.
It is interesting to consider which is more damaging to property taxpayers.

2. Objective standards of blight and but for are easy.

(We may assume that 100% of Illinois is blighted due to anomalous property tax rates and public employees entitlement debt.

We may remove the charade of “blight” entirely ax a condition because it has no meaning in a State so encumbered by public employee entitlements that only insider-exempted-taxpayer-subsidized property has any value.)

(Assessors know how to calculate property income ratios, and that is the only but-for objective standard relevant in 2020 economic development. Determine the Cap rate. Will insurance companies fund that development at that Cap rate? There is sn objective, unambiguous standard of “but-for”.)

3. Transparency is a tree falling in a forest. In Illinois there is nobody to hear it, to care about it, to chop it up for meaningful use as firewood.

Transparency requires people to act upon the information they are given, in order to be effective.

Ignored suggestions, for one:

Require TIF to fund retail or commercial development only. NO RESIDENTIAL DEVELOPMENT ALLOWED IN TIF.

The elegance of this: easy to legisle unambiguously. And who needs to pay developers to raise property taxes?
One can indicate mathematically that residential TIF in Illinois is a guaranteed money loser for taxpayers, while providing some individual landowner a profit that is dwarfed by the loss to taxpayers.

Taxpayers would be better off paying extortion to the residential TIF development team than to finance their project.

For a case study, please see analysis of costs to Woodstock taxpayers to subsidize the Lohmeyer Insurance Building TIF commercial-to-residential conversion.