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Sorry, folks: No dipping into TIF funds to help struggling businesses

Cities scramble to help while Springfield reconsiders fund restrictions

Peru Mayor Scott Harl signs a resolution creating a relief fund (total: $12,000 and counting) for those impacted by coronavirus. Municipalities across Northern Illinois are trying to help where they can by easing utility fees and halting shut-offs for non-payment, but relief cash is scarce. Lawmakers are discussing whether to open the spigots of restricted-use funds such as TIF districts.

Nobody will get their water or power shut off this month. Oglesby Mayor Dom Rivara knows cash is tight amid coronavirus and he doesn’t want anybody worried they can’t run the faucet.

Days before La Salle County had its first confirmed case of coronavirus, Oglesby announced a few stay-afloat measures to help businesses – indeed, all city residents – juggle expenses amid the hunker-down orders. City crews are busy, but not with shutoffs.

“We’re looking at other ways to help small businesses and the residents,” Rivara said. “Hopefully, we can get it done ahead of the curve.”

Rivara and other mayors across Illinois are eager to keep businesses afloat and are helping, at least where they can. Utilities and city services? No problem, there. Getting them cash is another story. To everyone’s dismay, cities have discovered that TIF districts, pillow taxes and revolving loan programs were not designed as emergency funds. That money just sits there.

Peru Mayor Scott Harl launched a relief fund. He personally funneled $5,000 into the till, which stands at $12,000 and counting. People have responded generously, Harl said, but the need is growing more swiftly.

“It will definitely go fast,” Harl predicted, noting the money will be distributed through the Tri-County Opportunities Council and not to individual supplicants. “It’s the right thing to do for our residents.”

Cash on hand is in short supply regionally, and two lawmakers in North Central Illinois say they’re exploring ways to give cities the flexibility to tap into limited-use funds.

“There are a lot of businesses hurting,” said state Rep. Lance Yednock (D-Ottawa), “and they’ve been asking what relief is coming through.”

State Sen. Sue Rezin (R-Morris) said she’s working on loosening restrictions that keep cities from doling out relief from limited-use funds such as the TIFs. Until the purse strings can be loosened, however, she’s pleading with businesses to apply for small business loans and grants – millions in new funds were announced midweek – even if their present needs don’t seem urgent.

“I would say apply for everything,” Rezin said, “and, I’m telling you, the line is long.”

Why apply to Springfield? Some funds managed by the cities are too tightly regulated to be available for emergency relief.


Peru attorney Herb Klein practices TIF law extensively and several of his municipal clients have asked him in recent days: Can we dip into the TIF funds to help out our businesses?

Answer: Not unless the Illinois General Assembly expands the use of TIF funds or unless Gov. JB Pritzker issues an executive order bending the rules.

Klein said the TIF Act is lengthy and cumbersome, but it does expressly say what TIF funds can and cannot be used for. Nowhere in the act are there provisions that permit the release of funds to help businesses with operational expenses.

“Could a city, for example, use TIF funds to help a business make payroll or pay insurance?” Klein said. “And the short answer to that is no. Not under the TIF act as it’s currently worded.”

Rezin said officials in Springfield have discussed easing the TIF rules to make the funds more readily available to businesses in need.

“It’s still high-level talks,” Rezin cautioned, “but this is an unprecedented time.”

Barring such a change, Klein said the only real remedy available to cities is the ability to accelerate a portion of the payments that a business may be entitled to under a TIF development agreement.

That would have to be evaluated on a case-by-case basis and there are many moving parts. Most cities remit eligible businesses on a pay-as-you-go basis but Klein said the law is a little fluid with respect to when businesses are to be remitted. It may be possible for cities to advance TIF funds to eligible businesses that enter into written business development agreements with their host cities.


Spring Valley is among the cities that have a revolving loan program to help business owners obtain funds to make facade improvements and other investments that ultimately bolster the city’s tax base.

But Debb Ladgenski, economic development director for Spring Valley, said revolving loans were designed as a supplement to commercial lending. If, for example, a business owner needed $200,000 for improvements but could only get the bank to lend $150,000, then the city would tap its revolving loan program to bridge the gap.

The program, however, simply wasn’t designed for crisis disbursements.

“It’s not a resource that’s been used for an emergency situation like this,” Ladgenski said.


Hotel-motel taxes (also known as pillow taxes) are a less restrictive form of revenue and can be used to bolster tourism.

However, pillow taxes are in limited supply and, with coronavirus bringing tourism to a halt, won’t be replenished any time soon. Utica is located at the edge of Starved Rock State Park and derives revenue from tourist traffic; but the park is closed and so is the village’s chief source of pillow taxes.

“The village currently only collects pillow tax from Grand Bear Resort, which is our only hotel, and they are currently closed during this outage,” Mayor David Stewart said. “As of now, pillow tax would not be a resource.”

Tom Collins can be reached at (815) 220-6930 or Follow him on Twitter: @NT_Court.

Tom Collins

Tom Collins

Tom Collins covers criminal justice in La Salle County.