D-302 balks at proposed tax district

By on July 15, 2011

Sugar Grove holds first meeting to discuss proposed economic development plan
By Keith Beebe
SUGAR GROVE—Sugar Grove’s Joint Review Committee, created in conjunction with the village’s Tax Increment Financing (TIF) district proposal, held its first meeting at Village Hall on Monday.

Attendance at the meeting was high, as several taxing bodies in attendance posed questions regarding the TIF District—an economic tool Sugar Grove wants to use to stimulate economic development by taking the incremental tax the village receives for improving a projected area, and then using that money to fund the development costs. Therefore, the TIF District provides businesses in the projected area with needed municipal support and infrastructure.

A village document defines the village’s redevelopment plan as an effort to spur non-residential development that will generate local jobs and expand the tax base. The TIF District regarding the projected industrial area would be in effect for 23 years.

“The meeting was well attended, and this is probably one of the first times a TIF District has been proposed in our area,” Village President Sean Michels said. “Other taxing bodies had some genuine questions and interests (during the meeting), and I would say everybody was cautious. A couple of questions came up, and Mike Hoffman (of Teska Associates—the company that designed the Redevelopment Plan for the village) and (Community Development Director) Rich Young were going to get back to them on those questions.”

The Redevelopment Plan document states that a TIF District can attract redevelopment to the projected area by eliminating conditions that inhibit private investment, weaken the village’s tax base and hinder the village’s ability to promote a cohesive development of compatible land uses. According to the document, the TIF District is projected to cover the industrial area that stretches from Route 47 (north) to an area near the Burlington Northern Railroad (south), and Aurora Municipal Airport (east) to village limits (west).

“There’s some concern about the size of the TIF District, and one of the reasons we’re making it large is because the property has to be continuous (and with) certain conditions—an area that is in decline, and it has to be industrial property,” Michels said. “We’re trying to put (the TIF) into property where we think there will be some kind of building going on with commercial and industrial activity.”

Some of the individuals in attendance have voiced other concerns regarding the proposed TIF District.

“Our board has a concern with the length (of time) of the TIF,” Kaneland Superintendent Jeff Schuler said. “Given the size of the area being included in the TIF, 23 years is a very long time. Industrial growth could certainly benefit both the village and other taxing entities, but when the TIF runs the full 23 years, that impact for the other taxing districts is pushed out too far.”

Schuler said that the Kaneland Board of Education is certainly willing to work collaboratively with the village in exploring options that would encourage industrial and commercial growth, but it needs to be done in a way that allows taxpayers to realize the impact of that growth without waiting 23 years.

School Board President Cheryl Krauspe had prepared a statement for the Joint Review Board meeting but was unable to read it, as statements were not heard during the hearing.

“The Kaneland School District does not feel that its best interests are served with the formation of the TIF District proposed by Sugar Grove,” she said. “The downside for Kaneland is that when funds are diverted for improvements to this large piece of property, it is revenue which cannot benefit the School District to help fund operations, construction or improvements for the life of the TIF, as long as 23 years. Twenty-three years is a long time to promote development in one area, as the TIF proposes.”

Krauspe said the long-lasting result will deny new tax dollars to other taxing entities, and if the TIF is successful and industrial growth happens, additional revenues would not find their way to the tax base for 23 years. In that scenario, there would be no resulting tax relief to the homeowners in the nine municipalities that Kaneland serves until the year 2034.

“Kaneland District 302 is open to exploring the option of an Intergovernmental Agreement, which could work to put part of the potential new revenues back into the servicing entities,” she said. “We would also be open to a change in the definition of this TIF district, such as a smaller area of property to be identified in the TIF, or a periodic release of those captured tax dollars to the overlapping units during a scheduled review basis.”

The village’s redevelopment plan document states that Sugar Grove is uniquely situated to take advantage of access to multiple transportation options that benefit current and potential business in the area, including major regional thoroughfares, highways, rail and airport access. However, industrial development in the outlined section of the village has been very limited because of the limited availability of infrastructure.

“It’s expensive to bring in water and sewer and bring in roads, and businesses will likely go to areas where there are already roads and water and sewer unless (those businesses) can somehow get some assistance in paying for those improvements, and that’s what the TIF District does,” Michels said.

The next Joint Review Board meeting is scheduled for Monday, July 25.

Estimated project costs:

$15.3 million
Administration, studies, surveys, legal,
marketing, etc.

$16.4 million
Property assembly including acquisition, site preparation
and demolition, environmental remediation

$4.1 million
Rehabilitation, reconstruction, repair or remodeling

$91.0 million
Public Works or improvements and capital costs
of taxing districts

Job training and retraining

$1.0 million
Relocation costs

$128.2 million
Total Redevelopment costs