R2023-153 Resolution Providing for a Feasibility Study on the Designation of a Portion of the City of Decatur, Illinois as a Redevelopment Project Area and To Induce Development Interest within Such Area

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August 3, 2023 TO: Mayor Pro-Tem Lisa Gregory& Members of the Decatur City Council FROM: Scot Wrighton, City Manager RE: Proposed Creation of a New Tax Increment Financing (TIF) District Presented for consideration are two separate agenda items which,taken together, begin the process of creating a new tax increment financing (TIF) district.A map illustrating the proposed boundaries of the new TIF district is attached; but the City Council will not be asked to finalize or formalize the map and district boundaries for many more months. Final approval of the TIF district (tentatively in January 2024)will legally set the boundaries,finalize a redevelopment plan, and begin the district's 23-year life. Between now and January,the city will contact property owners in the proposed district, conduct hearings, develop a plan for the use of TIF incentives, and comply with other legal requirements. As recently as 2 years ago, the city of Decatur had 7 TIF districts. Since then,the Southeast TIF District was closed in 2021 and the Olde Town Redevelopment Area TIF will be closed at the end of 2023.The Near North TIF will close in approximately 3 years.The city of Decatur has been a good steward of its TIF districts—meaning it has not used TIF resources beyond the limits of each district's redevelopment plan, and the city has not sought to extend any of its TIFs as permitted by statute. However,with the exception of the Olde Town Redevelopment Area TIF, Decatur's TIF districts have all been single-developer driven or single-project driven districts. In other words,they have mostly been narrow in scope, and were created to help specific developers (sometimes at their request). One TIF district aided construction of the current police station;two helped Niemann Foods retail projects;two others helped different retail owner/developers on Mt. Zion Road; and one assisted the Wabash Crossing affordable housing project. TIF districts must lie wholly within the city's corporate limits. TIF is one of the most effective economic development tools available to Illinois local governments, and it is more important now than ever before. It works by diverting the incremental property taxes created by new development into a special TIF fund administered by the city. The funds can only be used on development and redevelopment costs specifically authorized by state statute,AND which are listed and described in the council-adopted redevelopment plan for the district. For example,the law allows the use of TIF to support rehabilitation and remodeling of existing structures, but not for new construction of privately owned buildings.TIF does NOT raise property taxes, and it keeps local taxing bodies 'whole' because no local taxing district loses any of its existing equalized assessed value (EAV),or the taxes they historically receive from the EAVs in the district at the time it is created. Only the new increment is diverted, and only for the life of a project, or 23-years,whichever is less.Then the higher values are restored to the tax base, and all local taxing bodies then share the increment. TIF aids projects that would not materialize without such assistance.