We haven’t really had occasion to talk about TIFs in my time here, although it’s a topic that I’ve given a bit of study to over the years. A TIF district is a taxing increment financing district that a municipality designates as warranting special tax status for a specific purpose and for a limited period of time. Usually a TIF is put in place to offer tax breaks to a business district in order to incentivize businesses moving in and for commercial property owners to update their properties. A TIF district must be approved by the Illinois legislature and can’t just be unilaterally put in place by a municipality. I believe Palos Heights currently has two such districts, and one of those is set to expire next year. The district in question is along College Drive near Harlem Avenue. It includes properties where the new Palos Heights Senior Living facility was built, the shopping center where the new Culver’s is being built, and where there are still more plots that the City would like to see developed. Arguably, these properties would not have seen the development that we have seen in recent years if not for the existence of the current TIF, and the City would like to see that TIF remain in place in order to continue to promote business development in this corridor. The hope is that, at the end of the TIF district’s exemption period, there will be a much more robust business environment in this area which will be a cornerstone in supporting a stronger tax base not only from those businesses but from the increased property values in the community at large that results from having such a thriving business district nearby.
I would be remiss if I didn’t mention the counterargument to all of this. The counterargument is that TIFs create an artificially low tax burden for these businesses, and that they will simply pack up and move away if the TIF ever actually goes away. As the argument goes, the City is thereby coerced into extending the TIF district forever and never actually sees the long-term tax benefit from these businesses. While this is something that happens, it doesn’t happen in places where the business corridor is truly revitalized and strengthened. In such cases, businesses typically choose to stay because, even with the greater tax burden after the expiration of the TIF, profits are strong enough to justify continued operations. If consumer traffic increases dramatically throughout the revitalized TIF district, which is the intent, then businesses will be clamoring to fill any potential vacancies even without the TIF in place.
The implications of extending this TIF district for the library are minimal. If this TIF is extended, there will be no change from the tax base that we have seen over the past 12 years. Our levy will be unchanged and perhaps strengthened as more of those properties continue to be developed.
On the other hand, if this TIF is not extended we will also likely not see any meaningful change to our levy. Property taxes for those parcels will go up, but because of the nature of our levy being combined with the City’s, most of those additional taxes will be absorbed by the City’s portion of the levy and would not reach us. Also, City Hall will be unhappy with us for not having supported this project that they see as essential to the continued development of local businesses. I believe that the Mayor and City Council have done the research to determine whether or not this is a good move for the City. They also don’t want to needlessly turn down tax dollars if they don’t have to. But they have made the determination that this will be a good long-term move for the entire City.
Speaking for myself now, I have seen significant revitalization of the College Drive and Harlem Avenue area in my years here. Undeveloped properties have been developed. Older properties have been renovated. But there is still more work to be done to fill out a few vacant storefronts and develop on empty lots. I strongly suspect that this extension is going to be a good long-term move for the City of Palos Heights as I think it has been for the past 12 years.
Recommendation: I recommend that you approve issuing an official letter in support of the City extending the Gateway TIF District.