(upbeat music) (music swells) (music fades) - TIF districts in America have been around since the 1950s.

Illinois adopted TIFs in 1977.

Before we look at TIF districts locally, our Phil Luciano has a primer on how TIFs work.

- How do municipalities spark economic development?

One common tool is a TIF district.

That's TIF, or tax increment financing.

In Illinois, there are almost 1,500 TIF districts in more than 500 municipalities.

The idea is pretty simple.

First, a municipality identifies an area that's blighted, deteriorated, or otherwise unlikely to attract private development, unless the government steps in to help out.

So a municipality draws up the boundaries of a TIF district.

Then it calculates the district's total value of property taxes, which funds school districts and other taxing bodies.

Now, the following is important.

Setting up a TIF district does not affect that revenue.

In other words, as time goes on, school districts and other taxing bodies will still get the same amount of taxes.

How does a TIF help with development?

Presumably, the creation of a TIF district will prompt businesses to set up shop within the district, thus adding to the tax base.

Plus, older properties could rise in value over time.

So in coming years, the district's total property tax value will increase higher than the original base value.

That difference, that's known as the increment, and the municipality puts that increment into a special fund.

This increment is what makes businesses want to come into a TIF district.

That's because a municipality can invest the increment in certain projects inside that TIF district.

Those projects can include public works improvements, property acquisition, and other things that need to be done to make that district a better place to do business and to live.

The overall idea, more TIF investment will bring more businesses and more tax value and so on and so on and so on.

- Peoria City Manager Patrick Urich joins us now.

Patrick, thanks for coming on.

- Thank you, glad to be here.

- We talked about how in '77 Illinois started with TIFs.

You were telling me earlier 1978, one year later, is when Peoria had its first one.

- That's correct.

Our first TIF was established in 1978 with Southtown, with the area that was kind of just west of Downtown.

That was part of the Urban Renewal Initiative that was occurring in the late '70s in that part of the city.

That was followed up by our Central Business District TIF, which was around for about 35 years and that TIF just recently closed up.

So TIFs have been around for a long time in the City of Peoria, - And you gave me some information on TIFs that are both active and closed.

And can you give us an idea of some of the numbers of how your base value starts and how it could end up at the end of the life of the TIF?

- Sure.

So when a TIF is created, that base EAV is established, and that's the level of taxation throughout the TIF.

And as improvements are made to properties and their assessed value grows up, that incremental growth is then captured by the city and is used as part of the redevelopment agreement or is used for public works improvements in the area of the TIF district.

And from that, with all the TIFs that the city has built out, we've seen about a 30% increase in assessed value in the areas where we've established TIF.

And so that's really been a bit higher over the years than the rest of the EAV growth throughout the rest of the city.

Looking at our annual reports that we submit to the state for TIF, we've been able to calculate that since 1978, we have put in over a half a billion dollars of public and private investment in the TIFs inside the City of Peoria.

And of that, about 145 million was public investment and then there was a little over $350 million worth of private investment that was leveraged.

So, you know, really for every dollar of public investment in a TIF, there's been about $2.30 of private investment.

- And when you talk about a TIF, it seems to me, and correct me if I'm wrong, it seems like short term, businesses are gaining, some other folks are gaining.

In the long term, I guess the hope is that everyone gain.

- That's exactly what the intent behind it is.

You look at an area, you identify where those factors that qualify this area for redevelopment.

Once the boundaries are established, then you're working with the individual property owners, or the city is looking at making infrastructure improvements to help the area to grow.

And that's really the whole intent of TIF, it's the General Assembly gave us this tool to try and grow our tax base.

And this is one of those, probably the primary way that cities can grow is by using tax increment financing districts.

- And when you talk about establishing a TIF, I know it can get a little fuzzy, but some of the things you have to look at are blight.

- Correct.

- Which I guess is beauty or blight in the eye of the beholder.

Tell us how that is determined.

- I think there's some objective criteria they can look at.

I mean, they'll look at the condition of a property, they'll look at whether or not there are properties that the assessed value is declining.

That's a good indicator of a situation where you're not seeing that there's as much value in a certain neighborhood.

They'll look at a property to see if there are existing code violations on the properties.

If there there's been longstanding vacancies with the properties, that's usually a pretty quick trigger to the TIF district, to say if there's been vacancies.

And so you'll look at all of those different factors and then they'll look at, does the TIF area in total that the city is proposing, does it meet that criteria?

And if it meets that criteria, then it comes back to the City Council for a public hearing.

And then once you have the public hearing, then you go on to a full vote and an adoption of the TIF district by the City Council.

And then from there, you have 23 years initially, and you can extend it for an additional 12 years after that if the legislature passes a bill to support the extension of the TIF.

- Now, if it's closed, it's not extended, like looking at your list here, the Northside TIF, Southtown, Campustown, those are closed.

- Yes.

- [Mark] And I don't know, would there be the opportunity to have it reopened or is it now in such good shape that you can't deem it?

- Well, I think you can, you know, the General Assembly allows you to look at same areas again and see if they would qualify for reinvestment in an area.

But I do think if we look at, for example, the Northside area.

That includes PMP Fermentation and Solazyme.

They were two of the major properties where the city worked with those companies to invest in the industrial properties around that campus.

Very successful investment.

We saw that the tax base in that area grew significantly.

But at the same time, Taft Homes was included in that original TIF district, that Northside TIF.

What we've seen, what's happening now with Providence Pointe and basically the complete re-imagining of and reconstruction of Taft Homes, that there wasn't a TIF because the housing authority was able to use other funds for it.

And there's no property taxes that are gonna be generated off of the Providence Pointe project, so it's really not, there wasn't any need for a a TIF, 'cause it's really only property tax base is where our focus is.

In the '70s when TIFs were established you could use sales tax.

Campustown was one that collected a portion of sales tax, for example.

The Central Business District did at one point in time.

But now you can no longer do that, so it's really just focused on property taxes.

- To follow up to that, does anyone, quote unquote, "suffer" during a TIF?

I know that school districts have been critical of it.

What do you say to that?

- So we've had a lot of conversations with our local school districts with some of the most recent TIFs that we've created.

We created a TIF in Northwest Peoria in the area just west of Allen Road and north of Pioneer Parkway that we're calling them Medina Plains Business Park TIF.

And we worked with Dunlap schools to share in some of the incremental TIF revenue that's coming off of that on the initial development, which was the Maui Jim Kering Eyewear development.

There's 18% of the TIF increment will be shared with the school district.

But then as we move away from that, what we're looking at is that the rest of the TIF will get 22.5%.

We're in conversations with two other TIFs right now, we're looking at Galena Road along Route 29 north of the City of Peoria as a potential location for another TIF.

And in that area, what we're looking at is sharing with Peoria Heights School District 20% of the increment.

And then we're also looking down on Southwest Washington Street in the area where we don't currently have a TIF.

It would encompass the BioUrja plant, the ethanol plant that they have there.

It would include what was Caterpillar's old rubber plant, which has just recently been acquired by Black Band Distillery.

And in that area, we're looking at a potential 20% sharing of revenues with the Peoria Public School District.

So I think schools where, you know, taxes are the primary driver for schools of how they fund themselves and property taxes are very important across the city.

About 58% of your property tax bill goes to schools, ICC and then your local school districts, so that becomes a big part of that.

- Do businesses, you know, when a business is looking to expand or come into a new area, they're always looking for what's best for them, tax breaks, things like that.

Is it essential to have TIF districts today, as far as competition, if, you know, maybe one city and one doesn't?

- Yeah, that's a really good question, right?

Is it essential?

I think that what we're seeing with adaptive reuse, like in the Warehouse District, it has been vital that we had TIF in place.

What it's been able to afford us to do in properties like 812 Southwest Washington, 800 Washington, 801 Washington, 800 Southwest Adams, those are four of the biggest warehouses that we have in the Warehouse District.

Just in those deals alone, we're probably looking at almost 500 apartments that are gonna be built or are being built right now as we speak.

The TIF allows the developer to recover costs that they wouldn't.

And the margins are so tight in order to be able to put the type of investment you need to make into the adaptive reuse of these buildings and to make them code compliant and make 'em safe for people to live in, it takes that kind of investment to be able to get this back.

TIF isn't gonna give them, you know, all of their development costs back.

It's usually a portion.

Usually it's in the 20 to maybe 30% range of their total costs of the project, and they don't get that back immediately.

They've gotta get the project completed and then they gotta start paying property taxes on it and then they're just getting that back over time.

- Okay.

Looking at the list of projects funded with TIF, it's a long list, it's pretty impressive.

Just off the top you've got City Link, YMCA, gosh, a ton of different things.

The Peoria Riverfront Museum, Twin Towers.

What do you think Peoria would look like if we hadn't started with those TIF districts in 1978?

- You know, you can look in the Central Business District, as you were just talking about, you look at the Warehouse District and the changes that we've seen within the Warehouse District.

Southtown was another area where you see, within that specific geographic location, you have Caterpillar is building at the corner of Kumpf and Jefferson, their tech center that was there that wasn't built, but it was there because of Southtown.

You have Kindred Hospital in that area that was built because of the TIF district that was there.

You have Spring Grove subdivision that was built as part of that development.

As you look at the East Village Growth Cell TIF, some of OSF's campus investments there were because of the TIF.

As we look at the North Side, I mentioned PMP and Solazyme, but if you go further up Adams Street, we have O'Brien Steel, which has made some major investments because of the TIF in that part of the city.

As we look at at, you know, we've talked about the Warehouse District, but as you get further south, even into into Eagleview, we've seen investments by N.E.

Finch, we've seen investments by Behr Recycling down in the far south end of the city as they've looked at their operations.

And it's really helped us both on the industrial side, the commercial side, and now even on the residential side, working within the East Bluff with the East Bluff Neighborhood Housing Services and with the Southside with some of the efforts that we've done with Peoria Opportunities Foundation.

They have a project that's coming forward right near St. Ann's church.

So I think that Peoria would look very different if we didn't have TIF.

- As far as residents that you mentioned, you know, people moving into a TIF district like the Warehouse District once all these apartments are completed, is someone living in a TIF district, does that affect their life at all?

- It shouldn't affect their, well, hopefully it's affecting their life in a positive way, that what we're seeing is that there's- - But nothing coming out of their paycheck, their pocketbook, anything like that?

- No, there's nothing coming out in that regard, no.

- Okay, so nothing to worry about moving into a TIF area.

Are there any other type of government programs, something like a TIF that you can even compare please?

- So there there's a couple of other things that we've been able to layer with TIF.

For example, and what has really helped within the Warehouse District is historic tax credits.

Many of the warehouses are historic buildings, and, you know, they've been around for 125, 130 years.

As we're adaptively reusing those buildings, working with the State Historic Preservation Office, you look at what you can do to make improvements to the space that's consistent with the historic character of the building, and you can get tax credits for that.

And that, sometimes, depending on the qualified expenses, it can be about 85% of what those expenses are and it might be potentially up to 45% of the total cost of a project that could be leveraged in tax credits.

So we've used that in the Warehouse District.

Obed and Isaac's is a great example of a project where tax credits were used.

The Pere Marquette used historic tax credits in its renovation and efforts there.

So I think that that's another way that we've been able to leverage that at both a federal and a state level for those tax credits.

And then there's also the state has an enterprise zone where a developer could get some other incentives, whether it's a utility tax break if they're an industrial developer, or it could be just sales tax exemptions on building materials purchased inside the state of Illinois.

And that allows someone to take advantage.

It saves a little bit.

You know, if you spend a million dollars on equipment, you'd have what would amount to be about a $90,000 bill for taxes.

So, you know, that'd be nice to be able to get some of that back as you're going forward with that.

- Sure.

Are there any, not even just specifically in Peoria, but any type of area where a TIF just wouldn't work?

I mean, if someone says, you know, "My neighborhood seems blighted and we could use some help here," is there an area or a type of area where it's just not feasible?

- Yeah, I think that that, you know, as we've seen most of the residential development that's occurred in North Peoria, that certainly wouldn't qualify as being an area for a TIF.

I think that, you know, looking at the area around the shops at Grand Prairie, we would probably say that wasn't really an area that would qualify as a TIF.

And really you have to start to look at those factors that the state lays out, and there has to be a majority of the area has to qualify based upon those criteria that's laid out in the statute.

And so usually areas that are growing and are newer are not gonna see that.

The Warehouse District, certainly when we started that process, it did, because, you know, you started to turn that flywheel of redevelopment.

And that's what we wanna see, is eventually that we're at a point where a TIF wouldn't be needed because we've grown it to that point.

And what I'm really excited about, for example, in the Warehouse District, the council just approved a redevelopment agreement for the Chic Manufacturing building, which is on Adams, and right next to it is a surface parking lot.

And they're gonna, in addition to putting condos into the Chic Manufacturing building, they're gonna build new construction on that block.

And so we're gonna see that there's new construction coming out of the ground, which really says to me that the Warehouse District has arrived, that we're starting to see new construction coming into that area.

- Any examples on this list about the public and private projects funded with a TIF, any examples that maybe, not failed, but just didn't live up to maybe what the city thought a TIF could do?

- Well, you know, I think that first and foremost, probably the biggest one everyone would think about would be the Pere Marquette in terms of the amount of investment, public investment that the city made along with the developer to get that deal done.

You know, we have a new owner of the Pere Marquette now.

We've restructured the redevelopment agreement.

They've continued to agree not to contest their property taxes, but we're sharing in some of the hotel tax and sales tax revenues.

We provided some additional incentive to them using American Rescue Plan dollars to invest in the commercial space underneath the parking structure, and they're getting close to getting a restaurateur to come in and take over that space.

And that's probably the one that I would say didn't pan out the way that we were hoping it would, but- - Well, there are a lot of unusual factors in that whole situation, to be fair.

- Yeah, yeah.

So I think that that's probably first and foremost.

I think that we were pretty ambitious and have been pretty ambitious with the South Village Growth Cell TIF and the East Village Growth Cell as residential TIFs.

We've been able to use some of the TIF proceeds to help with some housing redevelopment work for homeowners that have properties in the area, but we're not seeing the level of growth in those because there's so much residential that's covered in those areas.

We're not seeing the growth in the tax base like we would hope for where you would see areas that were more focused on commercial or industrial areas.

We are seeing growth in tax base along the, for example, the Knoxville Corridor we've seen some investments that have occurred, but it's not really growing at the level that we had hoped it would with the residential side.

So that's one other area that I would look at and say maybe, you know, rethinking that in the future would be something we'd want to do.

- If you had to just guess with all these projects, what percentage of them would be new construction or what percentage would be like the Warehouse District where it seems like they're just renovating everything?

- I would say that most of it is gonna be renovation work.

Most of it's gonna be existing structures where we've worked it out.

There are gonna be some that are gonna be new, where we're gonna see new construction that's come in.

And in those instances, TIF doesn't allow for you to reimburse for the new construction.

It allows you to reimburse for the site improvements that you make around it.

It allows you to be reimbursed for your soft costs of developers, for the interest that you might pay on the project, but it doesn't directly allow you to be reimbursed for new construction.

There's a lot of other costs that go into a construction project other than just the building.

- And before we go, just to go back to kind of some oversight things.

Once the community has a TIF district, what is the oversight like in terms of what could be done and what can't?

- So the City Council approves budgets for each one of our TIFs every year.

So we present those to the City Council as part of our budget process where we talk about what's in each one of the TIFs, what are the redevelopment agreements that we have in place, what are we anticipating in the future.

In addition, we report back to the state of Illinois every year, to the Department of Commerce & Economic Opportunity, on the activities and investments that have been made in TIF.

And I think the General Assembly and the state wanna know that communities are using TIF responsibly.

And I'm very proud of the record that the city has with our ability to use TIF to help to really, as you drive around Peoria, there's a lot of properties that are really only there and have been redeveloped because of TIF.

- Have there been any examples of things maybe the city wanted to do and then the state said, "Eh, I don't know if that completely fits our criteria"?

- No, I think the state's pretty good.

I think that, you know, particularly DCEO, they wanna see our tax base grow and we really haven't moved in a direction to say we want to do something that that the state has said no.

There may have been public outreach or a public outcry that said we shouldn't do this.

For example, the riverfront apartments, when we were looking at doing that along just north of the RiverPlex, that became an area where the community said, "No, don't do it."

And ultimately the city decided, "Okay, we're gonna pull the plug on that project."

- Anything else?

We've explained a lot, and hopefully you have a better understanding now about how TIF districts work.

I know I do.

Anything else that you would like people to know about this process or how it's impacting the city?

- Well, I think it's a very important tool for us, and in the last year and a half, what we have seen is a number of TIF redevelopment agreements that total over $233 million.

So this is a continuing effort on our part of the city to try and grow our tax base, to make Peoria more livable, to make it more attractive for business investment, and we're gonna continue to utilize TIF and I hope that the community sees the positive benefits of it.

- All right, Peoria City Manager Patrick Urich, thanks very much for the explanation.

We appreciate it.

- Thank you.

- Back here now with Phil Luciano, and I know I didn't learn about TIF districts in civics class.

- (laughs) That's a lot of stuff!

I'm glad he was here to break that down.

Two things jumped out out of his conversation though.

One, that he says a new restaurateur is likely coming to town for that empty spot under Courtyard by Marriott.

And that's been an empty little, like a gravel, just a gravel floor for years and years and years and years and it's on the end of that property.

And out on the other side there's a parking lot, it's not very attractive, but right around the corner is the Civic Center.

So they get the right restaurateur and I think it might be an interactive type fun thing that would work with, you know, the big shows at the Civic Center.

That's great news.

The other thing, he mentioned the tax credits that one can get.

And I mentioned this only because so often on Facebook, I know, jumping into Facebook, the cesspool, right?

But so many times you see, hey, here's this old building, they knocked it down.

Why did they do that?

Or here, this old thing, why'd they knock it down?

And it is great that there are tax credits, but the only problem is, and I know this only because I've talked to developers, that some of these buildings and the specs you would have to rebuild to, even though you get the tax credits, too expensive.

Can't save everything.

- That's true.

- So that's why you gotta knock stuff down sometimes.

- Yep.

Well we will continue to keep abreast of what's going on in the Warehouse District and all over the city with these TIF districts.

But coming up in just a few minutes, we have got "You Gotta See This!"

What are we in for?

- Two things I wanna point out to you, if I might.

The first is you have, so I understand, furry friends.

- Yes, I do.

- You have friends who have fur.

Speaking of them, we're gonna do a story on the show about a local woman who, she had a great career as an accountant, but she also loved her dogs.

And she found out, hey, the nutrition in this dog food that mostly you can buy here and there, not really that good.

She invented her own to the point now she has her own business making treats for dogs, cats, and that's pretty cool.

And the the other story is, you know, saving people's lives, a great thing to do, CPR and whatnot.

Now, you and I could know CPR, but what if you're walking by someplace and someone's in here or in there, they're having a heart attack.

How would you know?

There's an app you can get on your phone, and then when there's an emergency, this app is activated.

And if you're like driving by or walking by and the emergency's inside, and of course you'd have to know CPR or whatever, it alerts you, you run in, save the day.

We have a story about that.

- Good deal.

Can't wait to learn about that.

Well thanks very much for joining us.

We appreciate it.

Stay tuned for "You Gotta See This!"

and check us out on the web web at wtvp.org and on Facebook and Instagram.

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