Market values for properties are rising again, but — shocking spoiler alert to follow — the state assessments lag woefully behind, and could soon cost taxpayers extra money.
In Park Ridge, properties’ equalized assessed valuations have plummeted to the point that City Hall officials are discussing property-tax increases to pump the needed money into their tax-increment finance district. In Wheeling, the Village Board voted on July 7 to recreate a pair of TIF districts that it dissolved at the end of last year, a creative move that has drawn the threat of a lawsuit from four other taxing bodies that could lose massive money from the deal.
Around the northwest suburbs, no one is happy about EAVs, but other outlooks are less dire.
“We’ve been OK,” said Jayson Hayden, director of community and financial services in Barrington. “But, we’ve dropped four years in a row. If it continues to drop another four years in a row, we might be in trouble.”
Barrington has one TIF, in its downtown area. Lake Zurich has one as well, also in its downtown. Lake Zurich Finance Director Jodie Hartman said danger could be lurking for the TIF in their foreseeable future.
“Within the next year or two, it will not be able to support its own payments,” she said of the district, which began in 2002, and has suffered since the beginning of the recession. “We didn’t really get the development we were looking for.”
In Park Ridge, the 2013 EAV came in with a 17.8-percent-drop — the worst of Cook County’s northern suburbs, which were reassessed in January.
A property’s EAV is different than its market value; the EAV is determined by a calculation of market value, its county’s assessment ratio and the state equalization factor. Good luck figuring all that out — but it means that while the economy is showing signs of recovering, the state is still flushing property values.
Which creates a major dilemma for municipalities with TIF districts.
When a city or village creates a TIF, it freezes that property’s EAV at the point of the district’s creation, and for the next 23 years, the schools, libraries and such that receive taxes based on its value have to go by the frozen-in-time rate. Presumably, the actual EAV increases with time, as property values generally do, and the money that would normally go to supported bodies goes into the TIF fund, to pay for improvements on that land.
When EAVs tumble, it means less money goes into the TIF fund than anticipated.
“The closer those get together, the less increment taxes we get,” Hartman said.
In Wheeling, two of its TIF’s EAVs fell below their starting points, meaning zero dollars were going into their funds. The trustees dissolved those districts last year — then recreated new ones at their last meeting, with identical boundaries, fresh 23-year clocks and rock-bottom EAVs.
The four taxing bodies that will now see even less money from those two districts than they did from the predecessors — Township High School District 214, Community Consolidated Elementary District 21, the Wheeling Park District and the Indian Trails Library District, have threatened a unified lawsuit to repeal the new districts. The five parties are currently negotiating an arrangement in which some of the lost funding might be restored.
“We have been working with the other taxing bodies and the village on an intergovernmental agreement that will benefit all members of the community and we have made fairly significant progress,” wrote Jessica Thunberg, District 214’s director of community engagement and outreach, in an e-mail. “We are hopeful that a finalized intergovernmental agreement can be agreed-upon in the next few days.”
Hayden said Barrington’s EAVs have dropped about 5 percent in each of the past four years. In Buffalo Grove, finance director Scott Anderson said their EAV fell 5.87 percent in the last report; Buffalo Grove has no TIFs.