Tax Increment Financing (TIF): Some Bacground
Let's Start With a Little History
Back in 1993, Congress made the decision to shut down the Glenview Naval Air Station, which had occupied 1,028 acres of land in the heart of the Village since 1937. As the base had been annexed into Glenview in 1971, the Village now “inherited” responsibility for this enormous, shuttered industrial complex. How to handle such a large redevelopment effort and ensure that it benefited Glenview as a whole?
After due consideration, the Village decided to act as the master developer of the site, now named “The Glen.” The stakes were just too high to parcel the land out to private developers with no input from the community and no way to balance land uses. After four and a half years of community-based planning and over 180 public meetings, the Board approved a Land Use Plan for The Glen in February, 1998.
A key part of this plan was a financial strategy to ensure that base redevelopment, including demolition of over 300 acres of runways/taxiways and one million square feet of Navy buildings, could be paid for by using revenues generated from the base. Key parts of this strategy included land sales from approximately 650 acres of private-sector development and property taxes generated from this development and collected via a Tax Increment Finance, or TIF, district.
What's a TIF District?
It’s an economic redevelopment tool used by communities to spur investment in a particular geographic area. Here’s how it works:
- A boundary is set around a particular group of proper- ties.
- Within those boundaries, the property tax values on the properties are “frozen,” that is, the tax revenue funneled to various local entities (schools, parks) remains at a specific level for no more than 23 years. · As the area begins to redevelop, property values rise — and so too do property taxes.
- Property owners do pay these rising taxes but . . .
- Any increment over the initial “frozen” valuation is retained by the Village government (instead of being paid out to those schools, parks and so on).
- These funds are used to pay redevelopment costs.
How Did the Village Set Up This TIF?
Most TIFs are used to help revitalize blighted urban areas. The Glen TIF is different. Village Trustees worked with State legislators to create it under an Illinois military base closure TIF law, “The Economic Development Project Area Tax Increment Allocation Act of 1995,” which labeled any military base closure in Illinois greater than 500 acres as being blighted and eligible for TIF dollars.
There was another problem with the regular TIF law. As the TIF district population grew, it placed increasing demands on local entities such as parks and schools. Yet these entities received no increase in property tax revenue to cover rising service costs. Concerned, Trustees successfully lobbied to include language in the new TIF law that allowed the Village to provide “make whole” payments (a portion of the new property taxes) to these jurisdictions to cover these growing costs.
These payments are now made annually to six “core jurisdictions” that serve The Glen, including:
- High School District 225
- Village of Glenview
- Glenview School District 34
- Glenview Park District
- Glenview Library
- Northbrook/Glenview School District 30
What Does the TIF Pay For?
In addition to Make Whole Payments, TIF dollars have paid for any number of redevelopment costs, including:
- Building out the infrastructure – for example, roads, sewers, sidewalks, Gallery Park, Lake Glenview and the Air Station Prairie.
- Demolition of Air Station buildings and infrastruc- ture.
- Administration – paying the staff guiding the rede velopment effort, covering the overhead associated with all the work involved.
- Providing incentives necessary to attract certain businesses.
- Paying interest and making payments on bonds to help retire debt.