Cook County Assessor Fritz Kaegi told 1st Ward residents Thursday night that tax increment financing districts “are a backdoor tax increase on communities.”
Kaegi, speaking to the online meeting from his home in Oak Park, said that countywide TIFs raise property tax rates an average of about 11%, although the impact varies depending on how widely TIFs are used in a given community.
The districts are created by municipalities under state law based on a conclusion that an area is blighted or otherwise in need of development.
The TIF process lets municipalities capture any increase in taxes generated by rising property values in the target area and devote that money to projects designed to advance development goals — in the expectation of further growth.
At the end of the 23-year life of the TIF other taxing bodies share in any increase in tax revenue. But in the interim they may have to increase taxes on other properties to cover their costs.
“There is an argument municipalities can make that a TIF is needed to stimulate development,” Kaegi said, “but you have to assume that the magic pixie dust will be waved” for other taxing bodies to see the benefit down the road.
Kaegi said politicians looking to create TIFs often follow the “IBGYBG” principle — figuring “I’ll be gone, and you’ll be gone” by the time a true accounting of the decision can be made.
Turning to the question of non-profit organizations and their tax-exempt property, Ald. Clare Kelly (1st) said she’d spoken to the local assessor in Hanover, New Hampshire, who said he walks “every square foot of tax-exempt property at Dartmouth College” to determine whether some of it should be on the tax rolls.
Kaegi said that in Cook County owners of exempt property have to recertify each year that the use of the property remains tax exempt.
“If we find that exempt property is being rented out for a taxable purpose, then whatever share of the property is being rented out becomes taxable and taxes have to be paid on it,” he said.
But he said his office has limited resources to investigate such issues, adding that the reporting requirements around that issue “can be improved.”
He also noted that under the law tax-exempt entities are allowed to earn some rental income without being subject to property taxes, if that income is used for the tax exempt purpose of the owner.
Asked about Northwestern University’s proposal to host rock concerts at a new Ryan Field, Kaegi said, “that’s the kind of thing that deserves some scrutiny.”