Belleville TIF Q&A

Belleville City Council members are scheduled to vote on May 26 on whether to approve the city’s 19th Tax Increment Financing, or TIF, district.

A majority of the 16-member panel has indicated they support the proposed TIF district for Illinois 15 across from the National Shrine of Our Lady of the Snows. Developers would receive $6 million in TIF funding for a hotel, restaurant, gas station and convention center. Here’s a breakdown of TIF issues in Belleville:

What is a TIF district?

In a TIF district, property values in the district are frozen at their current levels for a 23-year period and any additional revenue generated by a rise in property values is channeled into a special fund earmarked for infrastructure improvements and economic incentives in the district. It is intended to help property that would not develop on its own, property that would not see new growth “but for” the public investment. For 23 years the city keeps the difference between the frozen taxes and the new taxes generated by the development. This increment can be used to repay bonds the city takes out. Cities can make one extension to the 23-year life span of a district.

What do supporters of TIF districts say?

The districts raise commercial property values and support businesses that produce significant retail sales tax revenue for the city. Also, the districts can promote rapid growth and jobs in areas that otherwise would not be developed.

What about opponents?

Property that qualifies for a TIF district would be developed anyway. Also, other taxing bodies suffer while some businesses get multimillion-dollar tax breaks and other businesses get nothing. The districts hurt other businesses outside the zone, drawing customers and stores to one area and away from another.

Will my taxes go up?

City leaders say tax increment financing doesn’t raise taxes, but critics argue that because other taxing districts miss out on those incremental property taxes set aside in the special funds, the taxing bodies then raise their rates to compensate for the loss. Some argue that it may be worth the increase, and worth the temporary loss of revenue for taxing districts, if the property value and tax base are eventually boosted as a result of future development. Also, TIF districts can be set up so school districts can get a portion of the TIF fund.

What about the largest TIF district in Belleville, TIF 3?

This district covers most of the city and was established in 1986. The life span was extended and the district will expire in 2021. If you live in TIF 3, a significant portion of your city property taxes are often sent to that fund instead of the general fund. However, the total amount you pay in city property taxes doesn’t change whether you live in the TIF 3 district or out of it.

“If not for TIF 3, I don’t know how we would have turned this city around,” Mayor Mark Eckert said.

He said funds in the district are used mostly for infrastructure although some money is used for economic incentives for businesses. This year’s budget has $14.9 million.

TIF 3 is different than the one proposed for Illinois 15 near the Shrine. This district just includes the planned complex.

What’s the outlook for TIF districts?

“You’d never get a TIF like TIF 3 passed today,” Eckert said. “OK, you don’t like TIF. Give me an example of what could the city use to keep us competitive or even in the game at all? What would you suggest we do? What are we going to do when TIF 3 goes away?”

“I don’t like to pay taxes,” Eckert said. “But how do you improve the infrastructure and the equipment in your city without spending money? And where does the money come from?”

Ward 7 Alderman Trent Galetti ran on a platform calling for TIF reform.

“I’m opposed to the creation of just about any TIF at this point. I think we should let our TIFs expire,” Galetti said. ”Letting some of these TIFs expire will give us more money in our general fund, which is what we need. That’s been my position ever since I ran.”

“Let’s be a little more critical when looking whether to expand one, whether to create one,” Galetti said.

John Navin, professor of economics and finance and dean of the Southern Illinois University Edwardsville School of Business and a former Glen Carbon Village Board member, said cities do not have many “tools” for economic development. He said the two main incentives cities have are TIF districts and business districts in which a 1 percent sales tax can be diverted to developers.

What kind of sales tax revenue does the city get from businesses in recently created TIF districts?

Green Mount Commons, which is at Illinois 161 and Green Mount Road and includes a Walmart and Lowe’s, produces about $1.2 million a year for the city. Belleville Crossing, which is at Frank Scott Parkway and Illinois 15 and includes a Target and Home Depot, produces about $500,000 a year for the city. The proposed district on Illinois 15 could produce $500,000.

Eckert said the Green Mount Commons TIF for $18 million was a good deal for the city because the developers built a $110 million shopping complex. “We pay you 18 but you have to invest 110,” Eckert said. “I think it’s pretty much a no-brainer.”