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Analysis: Uptown TIF Good Value For Taxpayers

PGAV Planners
Analysis of development spurred by the Tax Increment Financing District in Uptown Normal showed good value for the taxpayer according to a consultant.

An analysis of the tax increment financing (TIF) district in Uptown Normal indicates the effort to spark development in the city center begun in 1999 has been a good value for taxpayers, according to a consultant.

Mike Weber is the director of PGAV Planners, a firm with experience in TIF districts that use increases in property tax money generated by new development to help pay for that development. The Town Council approved the TIF in 2003. Projects that have come or will come out of TIF contributions to developers include the Marriott, the Hyatt Place, the Trail East project, Uptown One, and Uptown Station.

In a presentation to the Normal Town Council, Weber said $90 million in local public investment has leveraged $206 million in private money and state and federal grants. That includes the planned Trail East project on Uptown Circle.

"That is more than two to one. While I would like to see that ratio higher, given the need for structured parking (parking decks in Uptown), you have done a good job in getting that return," said Weber.

Weber said Uptown redevelopment has included about 594,000 square feet of new building space, 342 new hotel rooms, 203 residential units, 700 parking places, the Children's Discovery Museum, and numerous renovations of other buildings.

"Success is measured by the amount of private investment and the addition to the tax base," said Weber.

And in measuring the tax base, Weber said the value of property inside the boundaries of the Uptown TIF has grown 202% since 2003.

a chart showing property tax growth
Credit PGAV Planners.
Overall property values have risen only slowly while the values within the TIF in Uptown have shot up markedly.

One knock on TIFs is that the property tax money created by the new development does not flow to school districts as it usually would.

"That is only true if the development would have happened without the TIF," said Weber. "Without TIF none or very little of this private redevelopment and renovation investment would have occurred."

a chart of tax rates
Credit PGAV Planners
PGAV Planners

Weber's study found school district tax levies have also risen more than projected if all the development in Uptown had happened without the TIF. He said several things have contributed to school increases in tax levies. Among them falling state support and rising bond debt as Unit 5 and Heartland Community College have constructed new buildings.

"The relatively compact nature of the TIF has also limited the impact on schools," said Weber. "The amount of unrealized revenue (from property taxes channeled into development projects) is four tenths of one cent for every dollar they levied. So, that's the impact on school districts," said Weber. Put another way, Weber said the TIF impact on schools is about 1.5%.

Weber said the total money school districts potentially missed from TIF is about $622,000. It would be more based on growth in the Uptown tax base, but Weber said some school district tax rates are already maxed out, regardless of tax base.

a chart of sales, food and beverage, and hotel tax growth.
Credit PGAV Planners
The economic impact of the TIF goes beyond property values, said consultant Mike Weber.

Weber's report also attempted to quantify spin-off tax revenues from sales, food and beverage, hotel, and packaged liquor sales. The estimated additional revenue from those sources within the TIF are $14.2 million, or more than the total of such revenue without the development within the TIF.

Another question about TIFs is whether property tax rates would be lower without them.

Weber said the owner of the typical $165,000 home would have paid about $60 dollars per year less without a TIF, but again, only if all the investment would have happened without a TIF.

"This Uptown TIF is tiny relative to the overall tax base. You have been wise to keep it so targeted. A lot of investment went into it. Five or six years from now, you will see the windfall of EAV (Equalized Assessed Valuation)," said Weber.

The Uptown TIF will run out in 2026. The town extended the life of the TIF until 2036, but with school district agreement the money generated by all but a small portion of the area will be turned over to schools. The agreement is to keep available incentives to develop in as yet, unimproved areas of Uptown.

The increase in Equalized Assessed Valuation within the Uptown TIF since its origin is $28 million. And EAV is one-third of the theoretical market value.

"Look at this city center. It is an investment," said Weber.

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WGLT Senior Reporter Charlie Schlenker has spent more than three award-winning decades in radio. He lives in Normal with his family.