IASB Beliefs
POSITION STATEMENTS
of the
Illinois Association of School Boards
January 3, 2006
Resolutions adopted by the IASB Delegate Assembly provide major policies for the Association and establish its stance on legislation and related matters of public policy. The Delegate Assembly, consisting of one voting representative from each Member School Board, meets each year in Chicago on the Saturday prior to Thanksgiving.
2.29 TAX INCREMENT FINANCING
The Illinois Association of School Boards shall support changes in the current Tax Increment Financing statute that will model adoption procedures after those established for Enterprise Zones, continue to provide definitions for terms such as "blighted" used in the statute, develop procedures for disbanding TIF areas that do not produce anticipated growth, remove the requirement that all taxing bodies participate equally, to be monitored by the TIF Joint Review Board at each of its scheduled meetings, reduce the financial impact of the TIF area so that the percentage loss of Equalized Assessed Evaluation (EAV) involved in the TIF will not exceed twice the average loss of EAV to each taxing body, limit its use in new residential development, and make the recommendation of the Joint Review Board binding. (Adopted 1986; Amended 1990, Amended 1997)
Worst-case TIF scenario?
Tax Increment Financing (TIF) problems may be growing more serious in Illinois. TIF costs to schools are rising as abuses of the TIF law become increasingly costly and common. In LaSalle County, a $600 real estate tax bill last year included $399 to be diverted to the local TIF. What is more, the home had existed long before the local TIF was established.
Faced with such abuses, experts say, school leaders must negotiate with TIF sponsors before TIFs are established in order to be certain the schools are "made whole," and thus avoid diversions of school revenue. That is, schools should demand to receive the same total revenue they would have received without a TIF in place. (Tips on launching such negotiations were explored in depth in the Illinois School Board Journal, March-April, 1991, p. 23, and in a subsequent issue of the Newsbulletin, "Who you gonna call? TIF Busters," December 20, 1991, page 3.)
Unfortunately, the state law on TIFs--the Tax Increment Allocation Redevelopment Act (65 ILCS 5/11-74.4 to 11-74.4-11)--does not contain any mechanism for preventing or penalizing abuses of the statute.
Nor does the law give school districts much power in the TIF-creation process. School leaders must adopt a pro-active posture in order to ensure fair treatment. They must be willing to publicize their rightful cause, through contact with local opinion leaders, for example.
Experts say the TIF law needs to be revised to protect school districts. One expert on TIFs, Al Humpage, Jr., Superintendent of LaSalle Elementary District 122, suggests that the following changes are needed:
When a TIF district is established, the schools should be made whole and, if there is a residential-area TIF, an impact fee should be established.
Like in an Enterprise Zone, schools should be able to "opt out."
The joint review board established for the TIF should be granted veto power.
An "oversight board" is needed to provide checks and safeguards on creation of TIFs.
Lawmakers should limit the number of TIF districts within a school district, city or county. Marion, a town in Williamson County, has six TIF districts, while an elementary school district in LaSalle County intersects four local TIFs.
The legislature should reduce the duration of TIF districts from 23 years to 10 years.
A limit should be placed on the financial incentive or fees of the TIF administrator.
No residential-area TIF districts should be allowed.
The size of TIF districts should be limited to 20 acres.
The law should rule out amending an existing TIF. Any changes should begin with the designation of a new TIF district.
IASB suggested similar amendments to the TIF law in 1987 after a committee investigated problems with the law.