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A disagreement about an agreement delayed the expected vote on the proposed Fifth Ward tax-increment financing, or TIF, district at the Sept. 27 meeting of the Evanston City Council. The new date for the vote is the Oct. 25 City Council meeting.
All four TIF-related items that had been listed on the Council agenda were introduced and then held over until the Council’s late October meeting.
In a TIF district, the tax increment – the difference between the property tax revenues in the district as the land went into the TIF (the base) and as improved – is placed in a fund that can be used to pay for certain infrastructure projects and other uses within the TIF. The fund typically lasts for the life of the TIF, typically 23 years. During that period, the taxing bodies receive their share of the base property tax revenues, and when the TIF is retired, the surplus is divided proportionally among the affected taxing bodies.
A potential TIF district must meet certain eligibility requirements and be approved by all taxing bodies that have a stake in the property tax revenues of the area. Representatives of each taxing body meet at least annually as a Joint Review Board.
Earlier this year, Kane, McKenna and Associates, the City’s TIF consultant, found that the proposed area met a sufficient number of the requirements to qualify as a conservation TIF – not, as some have suggested a “blighted” area.
On June 3, the Joint Review Board, including the chief financial officers of the two school districts, unanimously approved the proposed TIF. The next steps are for the City Council to approve the TIF and then file it with Cook County for certification.
During the public comment period, District 65 School Board President Anya Tanyavutti read a Board statement in English – which District 65 School Board member Sergio Hernandez read later in Spanish – asking that the vote on the proposed TIF be delayed until an intergovernmental agreement (IGA) between the City and District 65 is in place.
Over the years the City and one or both school districts have entered into IGAs or other agreements. This is the first time, however, that an IGA would have been in place before a TIF had been created.
Fifth Ward Council member Bobby Burns said he met with representatives of both school districts over the summer.
Emails obtained by the RoundTable through a Freedom of Information Act request show that Burns and City Senior Economic Development Manager Paul Zalmezak met in July with District Superintendent Devon Horton, CFO Rafael Obafemi, Board Vice President Elisabeth “Biz” Lindsay-Ryan and Tanyavutti to try to craft an IGA.
A proposed IGA sent by the District to the City last month was rejected because it was unilateral. “The District offered no consideration,” Burns said.
Burns said the City’s and District’s concerns – which were very similar – had been incorporated into a resolution placed on the Sept. 13 Council agenda. A provision in that resolution, requested by District 65, said the City committed that no TIF funds would be used to fund a new school in the Fifth Ward. That provision was later removed at the request of the District, the City said.
The resolution brought to Council on Sept. 27 had other changes as well: the addition of a Mayor-appointed monitoring/oversight committee, a provision to negotiate an IGA with District 65 and a slightly changed commitment not to use TIF funds for certain purposes.
The TIF committee will be composed of seven voting members – the Council member of the Fifth Ward; a person who does not own or occupy property within or adjacent to the district; three property owners or occupants of property within or adjacent to the district; one member of the Hill Arts Merchants Association; and one member of the Central Evanston Business Association. Two City staff members will be ex-officio members: the Economic Development Manager (currently Paul Zalmezak) and the Housing and Grants Manager (currently Sarah Flax).
Section 8 of the resolution reads, “The City commits to not supporting the use of TIF funds for: eminent domain, neighborhood clearance, funding for a new Civic Center, or funding for luxury housing/microunits.”
Luxury microunits are generally less than 500 square feet in area and contain high-end appliances and amenities. A recent article in Forbes described some luxury microunits as being 265 square feet and renting for about $2,600 per month.
Yet, just as the City felt the District’s proposed IGA was one-sided, the District felt that way about the proposed resolution. The School Board’s letter said the Sept. 13 resolution was nonenforceable and “did not have any protections to ensure that the City met its commitments.”
Because the parties were still in negotiations about the IGA, Tanyavutti and Hernandez asked that Council delay its vote until an agreement was reached.
Council member Clare Kelly, 1st Ward, moved to table the measures until Oct. 25.
“I think we should proceed in partnership with our school districts, and we should not be proceeding with our school districts in opposition. … And I’d like to table all of this and ask that you please come back and work out an IGA so that it’s in partnership and in collaboration with our District 65.”
The motion passed 5-4. Voting in favor of the delay, in addition to Kelly, were Jonathan Nieuwsma, 4th Ward; Thomas Suffredin, 6th Ward; Devon Reid, 8th Ward; and Cicely Fleming, 9th Ward.
Second Ward Council member Peter Braithwaite, who voted against the delay, said, “We’ve had IGAs before and don’t need to delay the TIF.”
Third Ward Council member Melissa Wynne said the City has had revenue-sharing agreements and other types of IGAs relating to TIFs in the past. She asked that the City Manager prepare documentation showing past IGAs and revenue-sharing agreements in conjunction with TIFs between the City and the school districts, how much revenue the school districts received under these agreements during the life of the TIFs and how much of the surplus funds they received when the TIFs were closed.
“I’d like to have that so that we all can see the fact that the City of Evanston has had revenue-sharing agreements with both school districts for years,” Wynne said. “And I want people to see what the amounts of those things are. I’d also like to information on what the tax-increment increase was with the last three TIFs that were closed. And what the tax-increment increase was for most school districts.”
Council member Reid said, “I think there has been an extraordinary effort on the side of the City, particularly Council member Burns and [Corporation] Counsel [Nicholas] Cummings to bring District 65 to the table. … I want to put District 65 on notice. I think it [the TIF] is prepared to pass. So I would hope that District 65 doesn’t drag their feet and getting some kind of IGA on the table that makes demands from the City, I think it’s important that we will have a document that is legally enforceable by another unit of government, if we don’t keep to our commitments with this TIF. That’s important. … I want to ensure District 65 is also making some hard commitments, just like the City is. And [these have] to be in the IGA. And I think we can move forward with this.”
‘We didn’t blow a deadline’
After the motion passed, Mayor Daniel Biss asked if there were consequences.
Zalmezak said representatives of Kane McKenna were on a call with him.
“It was important that we introduced the ordinances at the last meeting to make sure we met the State of Illinois Tax Allocation Act requirements of having ordinances introduced within 90 days of the [July 12] public hearing,” Zalmezak said.
He added, “So we’ve really accomplished that. This one-month or four-week or 3½-weeks delay doesn’t really change much in terms of how this is ultimately implemented. We do want to move forward within the next couple of meetings, because we want to make sure we get this certified by Cook County so that we can begin collecting increments so that we can start to do the work. So it’s important that we get this to the County. And to answer the simplest question: We didn’t blow a deadline.”