If a Tax Increment Financing district — implemented four years ago to spur industrial and commercial growth in Homewood along 175th Street west of Halsted — has failed, why should it be given a second chance?
Homewood Library Director Amy Crump posed that question to village board members Tuesday during a public hearing on whether the existing TIF on 175th should be terminated, then resurrected as an entirely new district.
“I am not sure it will make a difference to try this when there has already been a TIF district here,” Crump said. “It didn’t work.”
TIFs are complicated agreements between municipalities and other taxing bodies within their boundaries, such as schools and park districts. They are used to create a funding source to support economic development projects, including business and infrastructure improvements. TIFs generally last for 23 years and, during that time, the equalized assessed valuation (EAV) — the total value of all taxable property within the district — is frozen at its level at the time of its creation.
When TIFs are successful, the EAV increases in the designated area and revenue above the base valuation goes into the district fund. At the end of the TIF’s lifespan, the taxing agencies begin receiving revenue based on the increased EAV.
The area in question lies mostly along the south side of 175th west of Halsted, extending just past Loomis Avenue. It also includes the area, north of 175th, where the former Homewood Hotel was located.
Crump said she has supported Homewood’s previous use of TIFs to bolster economic activity in the village.
“I am concerned about the timing of this proposal,” she said, asking why the village would create another TIF that freezes EAV when local taxing bodies need money right now.
“The library is impacted by declining EAV,” she said. “Because of the lower EAV we are only receiving 80 percent of the funding that Cook County said we should get.”
Crump said she believes that the creation of a new 175th Street TIF is a “done deal” but questioned why it needs a life span greater than two decades.
“Why does it have to be 23 years,” she asked. “Why not a shorter amount of time?”
Robert Rychlicki, an executive vice president of Kane, McKenna and Associates, made a presentation at the public hearing on the woeful condition of the current TIF district. Kane, McKenna was hired by the village last year to help develop the new TIF district.
According to figures from Kane, McKenna, the TIF area’s EAV has been plummeting since 2008, when it was $17.425 million. In 2013 it was $8.261 million. (During the same period, Homewood’s overall EAV fell from $408 million to $335 million.)
Rychlicki said the current TIF qualifies for the state’s necessary “blighted” designation due to obsolescence, deterioration, excessive vacancies, lack of community planning and inadequate utilities.
Following the hearing, Rychlicki said Kane McKenna has been working with other municipalities around the Chicago area, such as Bellwood and Park Ridge, that have seen declines of 30 to 40 percent in the value of their TIF districts. Some are also terminating their current TIF agreements and starting over.
Rychlicki was asked why the new TIF district would work when the previous one failed.
He said his firm has heard from real estate professionals and the Cook County assessor’s office that “the bleeding stops in 2015.”
Communities throughout the region are still recovering from the giant economic downturn in 20008, Rychlicki said.
“But there are predictions of a rolling surge of home sales,” he said. “When that happens, there will be great benefit to projects like this.”
The village board is expected to take action on the TIF proposal at its July 28 meeting.
Editor’s note: The photographer for this story, Quincy Crump, is related to Amy Crump.
Homewood proceeds with creation of new TIF district on 175th Street (HF Chronicle, May 13, 2015)
Trustees give lukewarm reception to amusement tax reduction proposal (HF Chronicle, Aug. 26, 2014)