Notes to Membership

Senator Ann Gillespie reconvened her TIF/PTELL Reform Taskforce just before Christmas day to discuss new amendments to SB2298 that she would like to introduce in the 2022 Spring General Assembly for a TIF Act rewrite. The ITIA Legislative Committee has compiled the following issues that would prohibit redevelopment project areas from being achieved if those legislative changes are implemented.

This bill, as amended, contains major changes that will negatively impact every community’s ability to incentivize the type of development they want to see. The bill makes it more challenging to incentivize development in a historic downtown or an area that does not meet the bill’s arbitrary qualification thresholds for jobs and business bankruptcies.

Tax increment financing is currently accessible to any city that can prove that a portion their community qualifies under the strict guidelines in the TIF Act, but 2298 will severely limit every community’s ability to fight blighting influences. The bill eliminates several qualifying factors and makes it harder for areas that lack private investment to qualify for use of TIF.

The bill takes the power to make decisions about economic development out of a city’s hands and places it firmly with the members of the Joint Review Board. Just one dissenting vote on the Joint Review Board can spell disaster for a redevelopment proposal as 100% consensus is required for passage. The Joint Review Board must also offer 100% consensus around a TIF extension, similar to the current unwritten rule around TIF extensions. What other governing body decision requires that level of approval?

If a member of the Joint Review Board unreasonably withholds support from a redevelopment plan, the municipality may appeal to the Comptroller’s office for the ability to waive the objection from that particular board member.

The Joint Review Board will review all funds and determine what is surplus and what is not. This provision risks the feasibility of future redevelopment projects by potential eliminating the possibility of accumulating funds for later usage on projects. There is a good chance that all funds not committed through a redevelopment agreement will be declared surplus and distributed to the taxing bodies.

No more porting of TIF funds between redevelopment project areas except those pertaining to an agreement between municipalities.

SB 2298 Highlights and Concerns

Tax increment financing is currently accessible to any city that can prove that a portion their community qualifies under the strict guidelines in the TIF Act, but 2298 will severely limit every community’s ability to fight blighting influences. The bill eliminates several qualifying factors and makes it harder for areas that lack private investment to qualify for use of TIF.

1)  SB 2298 eliminates several qualifying blighting factors including dilapidation, deterioration, and excessive vacancies among others. The bill adds two qualifying factors in that an area’s jobs must have declined by 20% and 50% of businesses have left that area or went bankrupt in the last 10 years.

2)  The adjustment in qualifying factors would rule out areas containing large numbers of deteriorated and vacant buildings and any area where jobs have declined 19% or less or an area where only 49% or fewer of businesses have left or gone bankrupt. An area where jobs have decline 19% and 49% of business have left is an area that lack private investment and financial assistance through TIF.

3)  Other blighting factors impacted include:

a)  For Improved Land

i)  Lack of community planning

ii)  Require that 50% or more of structures are below minimum code standards where there was no

threshold before

iii)  Lack of ventilation, light, or sanitary facilities

iv)  Deleterious land use or layout

v)  Eliminate portions of the EAV factor related to “increasing at an annual rate that is less than the balance of the municipality” and less than the Consumer Price Index.

b)  For Vacant Land

i)  Obsolete platting

ii)  Diversity of ownership

iii)  Deterioration in neighboring areas

iv)  Same EAV factor limitations as for Improved Land

c)  Blighted before becoming vacant

4)  These provisions of the amendment would eliminate from consideration many areas that are in dire need of financial assistance to redevelop. Some questions/comments that need to be addressed:

a)  Why are deterioration, excessive vacancy, and dilapidation no longer determinants of blight?

b)  What data source would be used to fact-check the number of jobs in an area?

c)  Is the “area” just the redevelopment project area? Census tract? City? County?

d)  If the area does not contain any occupied residential units (such as a commercial corridor or industrial

park), how is the city supposed to determine the poverty rate?

e)  A lot of economic decline or advancement can occur between decennial census releases, doesn’t that make the poverty rate determination potentially inaccurate.

f)  A small industrial park or large-tenant commercial building that is in spectacular physical shape can qualify for TIF because more than 20% of jobs and 50% of business could leave with just one or two tenants, but a deteriorating, historic downtown may not qualify because they don’t meet these specific thresholds?

This bill, as amended, contains major changes that will negatively impact every community’s ability to incentivize the type of development they want to see. The bill makes it more challenging to incentivize development in historic downtown or an area that does not meet the bill’s arbitrary qualification thresholds for jobs and business bankruptcies.

1) The bill, and likely the drafter, does not take into the huge variety of potential TIF projects throughout the state. Each community has unique circumstances and deserves the right to pursue their own community’s goals based on their unique situation. This bill appears to negatively impact urban and rural communities the most and the wealthier suburban communities will largely be unaffected.

2) A historic downtown and its dedicated mom-and-pop businesses have different needs from suburban office parks. Each community should be allowed to pursue the economic development goals they set for themselves.

The bill takes the power to make decisions about economic development out of a city’s hands and places it firmly with the members of the Joint Review Board. Just one dissenting vote on the Joint Review Board can spell disaster for a redevelopment proposal as 100% consensus is required for passage. The Joint Review Board must also offer 100% consensus around a TIF extension, similar to the current unwritten rule around TIF extensions. What other governing body decision requires that level of approval?

1)  The municipality must receive written support from each member of the joint review board in order for a redevelopment plan to be adopted.

2)  The municipality must provide more than one documented refusal of a developer to bid in the area within the previous 5 years.

a)  There are likely areas throughout the state that haven’t received any interest at all for 5 years, not even enough to log an official refusal. 

b)  Not every redevelopment project or transaction requires bidding.

3)  Additional concerns:

a)  This bill is written for one part of the state and ignores the needs of projects throughout the state. Developers are not the only recipients of TIF funds. Small businesses, residents, and nonprofits can also be recipients of TIF assistance, and these entities and individuals are. severely limited by this bill.

b)  One might make the argument that a very small business or resident needs assistance the most and would be limited by this bill. Wealthy developers may be the target of this legislation, but small businesses, residents, and communities lacking resources will be the unintended victims.

If a member of the Joint Review Board unreasonably withholds support from a redevelopment plan, the municipality may appeal to the Comptroller’s office for the ability to waive the objection from that particular board member.

1) Why is the Comptroller’s Office the authority on TIF qualifications? Is there an alternative or is that the best option?

The Joint Review Board will review all funds and determine what is surplus and what is not. This provision risks the feasibility of future redevelopment projects by potential eliminating the possibility of accumulating funds for later usage on projects. There is a good chance that all funds not committed through a redevelopment agreement will be declared surplus and distributed to the taxing bodies.

2) This would likely eliminate a city’s ability to reserve funds for a major, necessary public projects in the future by distributing all funds as soon as they appear in the TIF allocation fund.

No more porting of TIF funds between redevelopment project areas except those pertaining to an agreement between municipalities.

Ann Gillespie

Sponsor

Senator – 27-D

(217) 782-4471 (Statehouse)
(847) 749-1880 (District)
Gillespie@senatedem.ilga.gov

Sample Resolution to OPPOSE SB2298

The ITIA has prepared a Sample Resolution to OPPOSE SB2298. Please utilize this in drafting your own to present to your City Councils or Village Boards for subsequent passage that can then be forwarded to your respective Senators and Representatives. It is also suggested that you e-mail a copy of your Passed Resolution to Senator Gillespie and Senator Bush.