Tax Increment Financing District Proposed for the Briergate Business District
Earlier this year the City of Highland Park engaged Camiros, Ltd. to conduct a TIF Eligibility Study and to provide a Redevelopment Plan for the Briergate Business District. Camiros, Ltd. determined that the Briergate Business District is TIF eligible and that a TIF District is an appropriate designation for the area.
At the September 11, 2017 Committee of the Whole meeting, City staff made a recommendation for Council to consider a Tax Increment Financing District (TIF) for the Briergate Business District to improve infrastructure within the area and encourage investment and revitalization.
At their regular meeting on Monday, September 25, 2017, the City Council will consider adoption of an ordinance setting the date and time of the Public Hearing concerning a proposed Tax Increment Finance (TIF) District for the Briergate Business District. If approved, the City Council will conduct a Public Hearing on Monday, November 27, 2017. Should the City Council move forward with the TIF process, on December 11, 2017, they will consider adoption of a Tax Increment Finance (TIF) District for the Briergate Business District.
The establishment of the Briergate TIF District would allow the City of Highland Park to support the cost of infrastructure improvements for the Briergate area in conjunction with funds collected for this purpose through SSA #18. The TIF would cover the cost of improvements that could not otherwise be funded by the SSA, and would allow the desired physical improvements to be completed before the SSA funds fully accrue. Otherwise, if the municipal budget allows, and if the City Council approves the project, the work will commence in 2025.
What is TIF?
Illinois law allows local governments to designate areas within their jurisdiction as Tax Increment Financing (TIF) districts. These specially-designated districts are used by local governments as a way to spur economic growth within these districts. The concept behind tax increment financing is that by making infrastructure and other improvements to a district, additional private sector investment will be drawn to the district, thereby increasing property values and property tax revenue. Tax increment financing captures the difference in existing property tax revenue within a district and future (higher) property tax revenue, after improvements have been made, to finance the cost of the improvements. The difference in existing property tax revenue (base revenue) and future (higher) property tax revenue is known as “incremental revenue”, and this incremental revenue is the source of funds to pay for infrastructure improvements and other eligible TIF expenditures to attract private-sector investment to the district. The base revenue continues to flow to the various taxing districts that levy taxes within the district, which helps to mitigate impacts on units of local government. Thus, the funds used for TIF district expenditures are not new taxes imposed on property owners, but incremental property tax revenue generated from increased investment in the district.
In Illinois, once a TIF district is approved, the designation stays in place for 23 years. During that period, any new property tax revenue generated by development in the district will be used by the City for infrastructure improvements or other development incentives intended to attract investment to the district.
Other local taxing bodies, such as public school systems, park districts, counties, etc., continue to collect their amount of property tax allocated before the TIF district was created.
The TIF process splits tax revenue generated from properties within the TIF district into two components:
• Base revenues – This is the amount of property tax revenue being generated before the TIF district is established; base revenues are shared among the various local governments that have taxing jurisdiction within the district.
• Incremental revenues – These new revenues are revenues over and above the base revenues and are generated by new investment in property that occurred after the TIF district was established. By allocating exclusive use of incremental revenues for eligible purposes defined by the TIF Act, the process generates a revenue stream in successful TIF districts to pay for infrastructure improvement and other incentives to encourage growth.
Only property taxes generated by the incremental increase in value of property within the TIF district are available to be used for TIF expenditures.
Throughout the life of a TIF district, schools, park districts, or other taxing bodies continue to receive the same amount of tax revenue from the properties within the TIF district based on the valuation of those properties at the time the TIF district is established. Taxes generated from the increased property valuation through the life of the TIF go into the TIF fund for use in TIF-eligible expenses. In order to establish a TIF district, municipalities must answer the “but for” test which asks if investment would occur within the proposed TIF district without the TIF district incentive. To move forward with a TIF District, the answer to that test must result in a finding that “but for the TIF district”, the investment in the district would not occur. In this way, the TIF district stimulates the investment in property that generates the revenue the TIF district uses to incentivize reinvestment and development.
Tax increment financing is often misrepresented or misunderstood to be a new tax or reallocation of existing taxes, which is not the case. Property owners within the district continue to pay their “normal” tax burden – no more, no less. Furthermore, the incremental tax revenue generated within the TIF district is reinvested back into the TIF district in which it was collected.
TIF Eligible Expenses
Although the following expenditures are eligible under TIF legislation, not all may be pursued if the TIF is enacted.
- Public Works and improvements
- Rehabilitation of existing buildings, fixtures and leasehold improvements
- Increased costs for the school and public library districts attributable to assisted housing units
- Job training, retraining and vocational/career education
- Financing costs pursuant to the provisions of the Act
- Interest costs incurred by a redeveloper or the provision of housing for low and very low-income households pursuant to the limitations and provisions of the Act
- Property assembly including acquisition, demolition, site preparation and environmental remediation
- Relocation costs pursuant to the provisions of the Act
- Payments in lieu of taxes and/or tax district capital costs as authorized by the City
- Analysis, planning, engineering, surveys, legal, marketing costs
Background - Skokie Highway Strategic Plan
The Skokie Highway Corridor Strategic Plan, which was adopted in 1993, called for a number of aesthetic improvements to the Briergate Business District, including curb, gutter, storm sewers, lighting, landscaping, streetscape, parking, gateway and wayfinding signage, repair or reconstruction of the existing pedestrian overpass, creation of a back road and an additional parking area along ComEd property and/or City utility easements, and other necessary infrastructure improvements designed to attract business and customers to the district, as well as enhance the district’s identity in the community. This included opening of the Old Deerfield Road railroad crossing which was an impediment to development in the District. It also suggested that the contribution of the district would not be strongly impacted unless the streets are improved and parking is organized to give it an appearance consistent with the rest of the community.
Background – City Meetings with Briergate Property Owners and Business Owners
In 2010, Briergate Business District property owners and business owners met with the Mayor, the Business and Economic Development Commission and staff to discuss their longstanding concerns about the lack of infrastructure in the district, including the absence of defined parking areas for businesses and customers, the presence of gravel along the side of the road infiltrating the City’s sewer system, frequent flooding, and poor lighting which posed safety concerns.
In 2011, Briergate Business Association District (BBAD) was established by Briergate property owners and business owners to serve as the organizing entity responsible for advancing the core goals of the Strategic Plan and to work with the City to address the needs of the district businesses.
In 2012, at the request of the City, IDOT installed one light pole at the southbound US 41 exit to Deerfield Rd. to improve visibility.
Special Service Area (SSA) #18 Approved for Briergate Business District
On December 9, 2013, the City Council approved Special Service Area Number 18 in the Briergate Business District to promote its long-term economic viability and as a means for property owners to share the cost of physical improvements and marketing in the Briergate Business District. At that time the estimated cost of the improvements was $3.6 million. The City’s portion of the estimated cost was $3.2 million. The annual SSA budget/levy is $40,000 over a ten year period, totaling $400,000. Annually, $10,000 of the $40,000 levy is available for marketing, events and beautification. Collection began in 2014 and will continue through 2023. The City collects the SSA funds and provides support to BBAD. The TIF would cover the cost of improvements that could not otherwise be funded by the SSA, and would allow the desired physical improvements to be completed before the $300,000 fully accrues. Otherwise, if the municipal budget allows, and if the City Council approves the $3.6 million project, the work will commence in 2025.
Briergate District Accomplishments 1999 - 2014
In 1999, the City opened the Old Deerfield Road Railroad Crossing.
In 2012, at the request of the City, IDOT installed one light pole at the southbound US 41 exit to Deerfield Rd. to improve visibility.
In 2013, street signs were erected to mark Richfield Lane as the extension of Richfield Avenue east of Old Deerfield Road to eliminate confusion customers have had finding businesses on Old Deerfield Road.
In cooperation with the Briergate property owners, the City installed gateway and wayfinding signage throughout the district to direct visitors around the area and promote and build awareness of the businesses in the district. The signs cost $18,000. The City contributed $6,000 and installed the signs on the public right-of-way. The signs are maintained by the City.
Additionally, the City, Park District and Illinois Department of Transportation (IDOT) worked cooperatively to improve the physical and aesthetic conditions in the Briergate Business District, located along Highway 41 and Old Skokie Road.
IDOT cleared invasive trees and shrubs (primarily Buckthorn) on the IDOT right- of-way between 1800 and 1200 Old Skokie Road along the west boundary of Highway 41 and the east side of Old Skokie Road.
Volunteers and IDOT crews were also devoted to clearing refuse from this area. A diverse mix of native grasses, sedges and wildflowers appropriate to the area were seeded in. This project continues in order to ensure that invasive species are adequately controlled and the native plants are established.
As anticipated, the clearing along Highway 41 resulted in improved visibility to the Briergate Business District and therefore attracted investment, redevelopment, improved sales and service revenues, and ultimately strengthened the business community.
As part of their concerted beautification efforts, the City also conducted property inspections and identify conditions that are in violation of code. This cooperative approach addresses long standing property maintenance issues in the area and improves conditions for all. The City continues to conduct inspections to identify any new maintenance issues and pursue enforcement of non-compliant properties.
Discussions of a TIF District for the Briergate Business District
In 2015, increased sales taxes and private investment in the area helped the City recognize success and potential for the area. It also provided a reason to invest in infrastructure.
In response to BBAD’s continued desire to advance these improvements before 2025, the City began investigating the possible design and installation of the improvements that could be funded through creation of a Tax Increment Financing District (TIF) in the Briergate Business District. The incremental tax revenue collected would only be used for improvements within the TIF area. Possible improvements that BBAD and the City are considering include curb, gutter, storm sewers, lighting, landscaping, streetscape, parking facilities and other necessary infrastructure improvements. The TIF’s purpose would be to encourage property redevelopment in a thoughtful manner to revitalize the subject area, benefit all taxing bodies, provide for economic development, job growth and improve the quality of life in the community.
Notification of Potential TIF District to Government Partners & Property Owners
In 2016, representatives of the City met with North Shore School District 112, Highland Park High School District 113, and the Park District of Highland Park to share the City’s interest in proceeding with a feasibility study and potential redevelopment of Briergate Business District. In addition, when surveyed by staff, major property owners in the Briergate Business District responded favorably to the possible creation of a TIF to fund improvements and induce private development and investment.
TIF Feasibility Study and Redevelopment Plan for the Briergate Business District
To designate a redevelopment project area (TIF district) under the Illinois Tax Increment Allocation Redevelopment Act (“Act’), a study is required to establish that the area meets certain statutory eligibility factors.
In July 2016, the City of Highland Park issued a Request for Proposals (RFP) from qualified consultants for a Tax Increment Financing (TIF) Feasibility Study and Redevelopment Plan for the Briergate Business District.
Scope of Services:
- TIF eligibility analysis
- Recommendation and refinement of the TIF District boundaries
- Redevelopment potential assessment
- Revenue projections
- Assessments of impact on affected taxing districts
- Cost/Benefit analysis
- Alternative public finance mechanisms
- TIF documents and public meetings
The City received proposals from two qualified consultants, Camiros, Ltd. and S. B. Friedman Development Advisors. In November 2016, an interview team comprised of representatives of the City, School Districts 112 and 113, the Park District, and an interested resident met with representatives of both consulting firms. The interview team unanimously agreed to recommend Camiros, Ltd., as the preferred consultant. In addition to qualifying as the lowest responsible proposer offering the most comprehensive services below budget, Camiros is familiar with the community, they have a deeper understanding of the project goals and substantial experience with similar projects. Camiros was also the consultant for the 2005 Ravinia TIF Redevelopment Plan and Project.
City representatives included City Manager Ghida Neukirch, Finance Director Julie Logan, Community Development Director Joel Fontane and Business Development Manager Carolyn Hersch. North Shore School District 112 was represented by Chief Financial Officer Chris Wildman. Township High School District 113 was represented by Assistant Superintendent for Business and Finance Barry Bolek. The Park District of Highland Park was represented by Director of Finance Annette Curtis. Resident Rick Heineman participated as well.
Taxing District Participation
Assistant Superintendent for Finance and Operations Greg Himebaugh of Deerfield Public School District 109 declined to participate in the interviews. He provided that although the District 109 Administration and Board is committed to working with their sister districts, it is likely to oppose a traditional TIF for the Briergate area unless it will be structured more in line with an Enterprise Zone with all taxing agencies having an equal voice in how funds are spent.
The intent of the proposed Briergate TIF is to encourage property redevelopment in a thoughtful manner to revitalize the subject area, benefit all taxing bodies, provide for economic development, job growth and improve the quality of life in the community. This would include infrastructure improvements to increase safety in the area, as follows: replacement of the roadway; and installation of curb and gutter, sidewalks, parking bays and lighting which presently do not exist in this district. It is unlikely that the area would qualify for an Enterprise Zone designation and would not accomplish the goals of the proposed TIF. The purpose of an Enterprise Zone is to stimulate economic growth and neighborhood revitalization in economically depressed areas of the state through state and local tax incentives, regulatory relief and improved governmental services. In an Enterprise Zone, the direct beneficiary is the property owner or business vs. reinvestment in the community. Businesses locating in one of state’s dedicated Enterprise Zones may qualify for certain incentives including a sales tax exemption, an investment tax credit of .5% of qualified property, a state utility tax exemption on gas, electricity and telecommunication, as well as other incentives.
In contrast to an Enterprise Zone, the key initial beneficiary of a TIF district is the community. Any incremental tax revenue the City collects within a TIF district can only be used for improvements located within the TIF district boundaries. Highland Park is a mature built out community with mostly older buildings and irregularly shaped and shallow infill parcels. It does not have large commercial and industrial parks to attract corporations that would benefit from an Enterprise Zone therefore this option may not achieve the same goals as a TIF. However, the City has assured Mr. Himebaugh that if the selected consultant indicates that an Enterprise Zone, or another economic development tool, would best accomplish our goals and provide the greatest benefit to all taxing districts, it would be open for discussion.
Approval of a Professional Services Agreement with Camiros, Ltd.
In December 2016, the City Council approved a professional services agreement with Camiros Ltd. for the provision of a TIF Eligibility Study and Redevelopment Plan for the Briergate Business District.
TIF Study 2017
In 2017, Camiros, Ltd. initiated the project. As result of the study, Camiros determined that the Briergate Business District is TIF eligible, and that the designation of the Briergate TIF District is appropriate, and establishment of the Briergate TIF district would allow the City of Highland Park to support the cost of infrastructure improvements for the Briergate area in conjunction with funds collected for this purpose through SSA #18.
Most TIF districts are designated as either a “conservation” or “blighted” area depending on building age and the presence of a specified number of eligibility factors that are listed and defined in the Act.
Camiros found that the Study Area meets the eligibility requirements of the Act for designation as a conservation area. Conservation areas are not yet blighted, but may become blighted if the conditions identified in the eligibility study are not addressed through public intervention and the adoption of the redevelopment plan.
In order to be designated as a conservation area, 50% or more of the buildings within the Project Area must be 35 years of age or older. Of the 50 buildings in the Project Area, 34, or 68%, were built before 1982 therefore the Briergate Business District has met this threshold since 68% of buildings are at least 35 years of age. Once the age requirement has been met, the presence of at least three of the 13 conditions stated in the Act is required for designation of improved property as a conservation area. These conditions must be meaningfully present and reasonably distributed within the Project Area. Of the 13 conditions, six conditions meet these requirements. The following conditions have been used to establish eligibility for designation as a conservation area and qualify the Briergate District for public intervention:
- Obsolescence - 68% of buildings are 35 years or older (50% required)
- Deterioration – of the 82 parcels 70 parcels (85%) were deteriorated
- Presence of structures below minimum code standards - 29 buildings (58%)
- Inadequate utilities - Public utility lines serving parcels along Old Skokie Road are old, in poor condition and do not meet modern utility standards; this condition impacts 54% of tax parcels
- Excessive land coverage & overcrowding of community facilities - 51 tax parcels (62%) are impacted by this factor
Taxing Districts within the Proposed Project Area
Lake County. The County has principal responsibility for the protection of persons and property, the provision of public health services and the maintenance of County highways.
City of Highland Park. The City is a home rule municipality that is responsible for the provision of a wide range of municipal services, including police, fire, capital improvements and maintenance, water supply and distribution, sanitation service and building, housing and zoning codes, and the maintenance of City streets.
City of Highland Park Library District. The Highland Park City Council adopted an ordinance establishing the Highland Park Public Library on September 14, 1887.
Park District of Highland Park. Established in 1909, the Park District owns and manages more than 700 acres of land in 44 park areas. The District provides a full range of indoor and outdoor recreational activities to more than 30,000 residents in the City of Highland Park and a small portion of the Village of Deerfield.
North Shore School District #112. District #112 serves more than 4,300 students from Highland Park, and Highwood. District #112 was created in 1993, through the consolidation of Districts 107, 108, and 111. (Tax Codes 18068 and 18069)
Highland Park Township High School District #113. Township High School District 113 serves the communities of Highland Park, Deerfield, Bannockburn, Highwood, and Riverwoods. Nearly 3,800 students attend the districts two high schools – Highland Park High School and Deerfield High School.
Deerfield School District #109. District #109 serves approximately 3,100 students from Deerfield, Riverwoods, and a small portion of Highland Park. The district provides educational services from pre-kindergarten through eighth grade. District facilities include four elementary schools and two middle schools. (Tax Code 18070)
College of Lake County #532. The District is a unit of the State of Illinois' system of public community colleges, whose objective is to meet the educational needs of residents of the County and other students seeking higher education programs and services.
Township of Moraine. Moraine Township is a basic division of a County with powers to levy taxes, pass local ordinances and regulations, and provide various services as authorized by state statutes and elected officials. The Township’s boundaries include all of Highwood, most of Highland Park and small portions of Deerfield and Lake Forest.
Southlake Mosquito Abatement District. The Mosquito Abatement District is responsible for protecting public health by abating mosquito nuisances using appropriate pest management methods. The District serves the communities of Bannockburn, Deerfield, Highland Park, Highwood and Riverwoods. The District serves a small portion of unincorporated Lake County as well as corporate properties
North Shore Water Reclamation District. The North Shore Water Reclamation District (NSWRD) was organized in 1914 under the North Shore Sanitary District Act of 1911. The NSWRD owns and operates more than 100 miles of intercepting sewer lines and 10 pumping stations that collect and convey wastewater from local sewer systems to water reclamation facilities in Gurnee, Waukegan and Highland Park.
Lake County Forest Preserve District. The Forest Preserve District was established by referendum in November 1958, and is responsible for acquisition, restoration and management of lands for the purpose of protecting and preserving open space in Lake County for the education, pleasure and recreation of the public.
East Skokie Drainage District. The Drainage District is responsible for maintenance and resolution of flooding issues associated with drainage ditches and streams within the East Skokie Drainage District boundaries.
Joint Review Board
As part of the TIF process a Joint Review Board (JRB) composed of representatives from local taxing bodies, as well as a public member, must be convened.
The JRB is established to review the plan for redevelopment of the TIF area. The JRB allows the various taxing bodies to provide their input on the matter to the municipal authorities. The JRB’s recommendation is advisory and their role is to consider whether the redevelopment project area and redevelopment satisfy statutory requirements and the eligibility criteria defined in the Act. After a TIF District is in place, the JRB must meet annually, by law, to review the effectiveness and status of the TIF District.
Taxing Jurisdictions Represented on the JRB:
- County of Lake
- City of Highland Park
- North Shore School District 112
- Township High School District 113
- Deerfield Public School District 109
- College of Lake County 532
- Park District of Highland Park
- Township of Moraine
PROPOSED BRIERGATE BUSINESS DISTRICT TIF BUDGET
Briergate TIF Redevelopment Plan and Project
A copy of the Briergate TIF Redevelopment Plan and Project is available for review in the Office of the City Clerk at City Hall, 1707 St. John’s Avenue.
Should you have any questions concerning the proposed Briergate Business District TIF District, please contact Business Development Manager Carolyn Hersch at 847.926.1027 or email@example.com.