Springfield approves extension of Ottawa downtown TIF, applies only to new developments

Extension allows Ottawa to woo new development, mayor says

Ottawa’s downtown tax increment finance district has been extended until 2034 with the passage of House Bill 227 in the Illinois General Assembly.

The TIF district was initially set to expire in 2022 and an extension was discussed as early as February 2019.

“This extension gives us tax benefits to offer to any new developers coming into the area,” said Mayor Dan Aussem. “It’ll end up being good for us and the grade schools and high schools because once a TIF runs out, it’s hard to get new developers into the area without incentives.”

TIFs are an economic development tool aimed at clearing up blighted areas by allowing local governments to dedicate the new sales tax and property tax revenues generated by a redevelopment project to pay for improvements within the district.

Aussem said the TIF district is good for the schools because the extension only pertains to new developments, so existing businesses don’t get to benefit from the TIF district in a direct way. This means schools will once again receive tax money for existing businesses.

The city would declare a surplus and give taxing bodies 50% of the funds they would have received if the TIF expired but not on any new projects.

Aussem said the process for this extension started in 2019 and it required an agreement with every taxing body along with a letter of approval sent to the Illinois General Assembly.

The remaining 50% of that surplus can be used to address collapsing buildings and offer programs, such as facade improvements for incoming businesses.

If the TIF were to end, taxing bodies like the schools would receive 100% of the taxes on current developments but incentive plans and associated programs downtown might end.

The state passed a new law that will provide taxpayers with more information about how well TIF districts are performing, reported Capitol News Illinois.

Those can include costs associated with redeveloping substandard, obsolete or vacant buildings, financing public infrastructure, cleaning up polluted areas, improving the viability of downtown business districts, rehabilitating historic properties and providing infrastructure needed to develop a site for new industrial or commercial use.

As of 2015, there were 1,238 active TIF districts in the state, according to TIF Illinois. According to Illinois Comptroller Susana Mendoza, who pushed for the bill, municipalities have been required to report certain financial information about the districts to the comptroller’s office, but there has been little information available about how effective they have been in meeting their goals.

House Bill 571, by Rep. Jonathan Carroll, D-Northbrook, and Sen. Ann Gillespie, D-Arlington Heights, begin reporting additional information including the number of jobs originally projected to be created in each district along with the number of jobs actually created; the actual amount of new revenue created compared to the amount originally forecast; and the stated rate of return for the project, which must be independently verified by a third party chosen by the municipality.

More efforts in Springfield

Aussem said there’s another piece of legislation the city is waiting to hear finalized regarding deed restrictions on city-owned land along the Illinois and Michigan Canal and the Illinois River. It’s something the city has been trying to get taken care of for a long time, and something Aussem said city officials thought they took care of in the 1980s.

The deed restrictions on a downtown waterfront property in the area of Woodward Memorial and the nearby parking lot have been released by state lawmakers, but await the governor’s signature.

“We went back and looked and decided instead of doing one piece at a time, we just decided we could try and get rid of all the deed restrictions these properties we purchased at once,” Aussem said. “That way, if a developer wants to do something with that land, we don’t have that restriction to contend with.”

A few years ago when Ottawa’s waterfront project was being proposed, it was identified this portion of land CL Real Estate had been eyeing had deed restrictions. The restriction notes the land can’t be sold and must be available for public use, but the city asked the state to release all these restrictions.

The land may now be sold and owned for private use.

Aussem said the city acquired the land in the 1970s and believed the restrictions had been removed in the 1980s, but that wasn’t the case.

“These agreements are older, written back in the 1950s,” Aussem said. “We’ve been told it’ll be easier to get a bill passed straight out rather than go around trying to figure out what happens with the language.”

Aussem said state Rep. Lance Yednock (D-Ottawa) and Sen. Sue Rezin (R-Morris) were instrumental in getting the extension passed through the General Assembly.

— Capitol News Illinois reporter Peter Hancock contributed to this report.