Richmond's TIF Plan discussed

Richmond Village President Laurie Olson presented information about the proposed Richmond TIF (Tax Increment Finance) to a combined meeting of the boards for the Richmond Fire Department and the Nippersink Library. Village Manager Tim Savage also attended the meeting.

 

Tax Increment Financing is used for public improvements such as roads and sidewalks, utility upgrades, water and sewer projects, the rehabilitation of deteriorating buildings,  building facade improvements, correction or mitigation of environmental problems and concerns, and incentives to retain or attract private development. A TIF district does not impose any additional taxes.

 

According to a handout named ‘TIF 101” provided by EDR (Economic Develpment Resources) that was distributed by Olson, a “TIF” is “a tool for the eradication of blight, the amelioration of conditions precedent to blight, and a means for municipalities to use the growth in tax revenues - produced by an increase in real property taxes generated within a specified, eligible area of the municipality – to pay for the costs of (re)developing that area. When created, these revenues are deposited into a separate account (the Special Tax Allocation Fund or TIF Fund) that is controlled by the City. The revenues are then used to pay for a wide variety of permissible “redevelopment project costs”. A TIF Area (also referred to as the “redevelopment project area”) can remain in place for up to 23 years, and may be extended to 35 years under certain conditions.

 

“To be eligible for TIF, a portion (minimum of 1.5 acres of contiguous property) of the municipality must contain property that can be designated as a ‘blighted areas’, ‘conservation area’, ‘industrial conservation area’, or a combination thereof.”

 

If the Richmond village board approves a RIF, it will notify the McHenry County to determine the “base value” of the taxable real property in the TIF area. Taxing bodies such as the library, the fire department, and schools will continue to receive the real property taxes as set in the “base value.” When properties inside the TIF increase in value, the additional taxes for the increased value will go into the village’s TIF Fund account. Thus, the taxing bodies will lose only the taxes over and above what they are getting after the “base value” is established.

 

How can Richmond use the extra money?  According to the “TIF 101” publication, Richmond can pay a portion of the “redevelopment project costs” as identified in the original TIF Plan. These costs could include, but are not limited to:

 

1. Costs of studies, surveys, plans and other professional service costs and the implementation, marketing and administration of the TIF Plan and TIF Area;
2. Property assembly costs, including acquisition, demolition, site preparation and improvement;
3. Costs of the rehabilitation, reconstruction, repair or remodeling of existing buildings;
4. Construction of public works and improvements;
5. Job training and retraining;
6. Financing costs, such as those associate with underwriting, as well as capitalized interest;
7. All or a portion of a taxing district’s capital costs resulting from (re)development within the TIF Area;
8. A certain percentage of increased costs incurred by school districts and library districts resulting from “TIF-assisted” residential development;
9. 9. Relocation costs;
10. Payments in lieu of taxes;
11. Developer’s interest costs.

 

The TIF PLAN

 

Before Richmond could collect and spend any TIF revenues, it must create and approve a TIF Plan. The TIF Plan must define the geographic area of the RIF, describe the redevelopment projects in that defined area and identify a comprehensive program for (re)development for the area defined.

 

Olson and Savage have drawings of the proposed TIF geographic area in the village hall. Generally, the proposed plan area would be along both sides of Route 12 from the village hall on the south side to a few blocks north of the McDonald’s restaurant on the north side. The west edge of the TIF would run along the prairie path that is about one block west of Route 12. However, as drawn, the TIF boundary would include the American Legion building west of Rt. 12 on Rt 173.

 

“It is important to know that most of the TIF area is already zoned Commercial,” said Savage.

 

Nippersink Library President Adrienne Adams asked if the TIF consultant determined if it qualifies in Richmond. “Our consultant said the TIF does qualify,” said Olson.

 

According to “TIF 101” the TIF Plan must also include:

 

1. An itemized list of estimated redevelopment project costs;
2. Evidence indicating that the redevelopment project area on the whole has not been subject to growth and development through investment by private enterprise;
3. An assessment of any financial impact of the redevelopment project area on or any increased demand for services from any taxing district affected by the plan and any program to address such financial impact or increased demand;
4. The sources of funds to pay redevelopment project costs;
5. The nature and term of the obligations to be issued
6. The most recent equalized assessed valuation of the redevelopment project area;
7. An estimate as to the equalized assessed valuation after redevelopment and the general land uses to apply in the redevelopment project area;
8. A commitment to fair employment practices and an affirmative action plan;
9. If it concerns an industrial park conservation area, the plan shall also include a general description of any proposed developer, user and tenant of any property, a description of the type, structure and general character of the facilities to be developed;
10. If property is to be annexed to the municipality, the plan shall include the terms of the annexation agreement.

In addition, the TIF Plan must contain information that will enable the municipality to make the following findings:

 

1. The TIF Area on the whole has not been subject to growth and development through investment by private enterprise and would not reasonably be anticipated to be developed without the adoption of the TIF Plan;
2. The TIF Plan and redevelopment project(s) conform to the comprehensive plan for the development of the municipality as a whole;
3. The estimated dates of completion of the redevelopment projet(s) and retirement of obligations issued to finance redevelopment project costs;
4. In the case of an industrial park conservation area, that the municipality is a “labor surplus municipality” (as defined in the TIF statute) and that the implementation of the TIF Plan will reduce unemployment, create new jobs and enhance the tax base;
5. The TIF Plan will not result in the displacement of residents from 10 or more inhabited residential units, and that the TIF Area does not contain more than 75 inhabited residential units. If this finding can, and is made, no Housing Impact Study is required. If this finding is not made, a Housing Impact Study must be completed and made part of the TIF Plan.

 

 

Some people in the Richmond community are concerned about “eminent domain” power of the village and whether the TIF strengthens the village’s ability to enforce its “eminent domain” power. According to Olson, the village could use the “eminent domain” power with or without the TIF in place.  “We are not forming the TIF to enhance eminent domain power,” said Olson.

 

Carol Hansen of the library board asked how the TIF may affect impact fees. “There would be no change in impact fees,” said Olson. “They are unrelated to the TIF.”

 

Olson said that owners of potential new businesses like the hotel and winery that could go into the golf course area are very interested in the benefits of the businesses being in the new TIF district. Olson also mentioned that a potential buyer for a downtown building brought up the subject of the TIF. “Woodstock and McHenry both have TIF districts,” said Olson.

 

To bring the proposed TIF to the next stage, the village will establish a “Joint Review Board” that will be comprised of one representative from each taxing body including the fire department, library, township, McHenry County College, McHenry County, Richmond Village, McHenry County Conservation District (MCCD) and “one citizen at large.”

 

Savage encourages citizens from the community to attend meetings and ask questions about the TIF proposal. He and Olson want to improve the property value inside a TIF and attract new business at the same time. A flyer from the village about TIF DIstricts addresses many issues.

 

About schools: "Richmond school districts continure to receive all the tax revenue they were entitled to before creation of the TIF DIstrict."

 

About downtown development: "Property tax revenue generated from private developent within a TIF District is new money. Without TIF financing, development would not occur and the tax increment would not be produced leaving the area economically stagnant."

 

About monitoring the TIF: "The full tax base, including the tax increment, becomes available to all taxing bodies after the TIF District ends. Until then, all major taxing bodies meet annually with the minicipality to review the progress of the District."

 

What is the time line? "A TIF district could be a reality by the end of this year at the earliest,” said Savage.

 

To contact the village call 815.678.4040.

 

The village website: www.richmond-il.com. Minutes of past meetings can be viewed here.