Downtown Building Boom, but at What Cost? Arlington's Tax Incentives Raises Some Concerns
Davis, Jon, Daily Herald (Arlington Heights, IL)
Byline: Jon Davis Daily Herald Staff Writer
Arlington Heights' downtown construction boom is the envy of suburban planners everywhere, but is the village giving away too much in tax incentives to make it happen?
On one hand, defenders of the special tax incentives say they are necessary in today's development world, and that no unworthy project has gotten aid.
"We're doing the right thing," Trustee Tom Stengren said. "Believe it or not, it all makes sense."
Through the use of special taxing districts, the village has created a downtown construction boom - public and private projects representing $140 million are either underway or on the drawing board.
Arlington Town Square and Village Green, both featuring a mix of condominiums, retail space and underground parking, and a new Metra commuter station are being built in part because Arlington Heights gave tax aid to get the projects rolling.
Developers of two proposed projects - the live theater Metropolis Performing Arts Centre and Paddock Place, another residential-retail combo - are also seeking TIF assistance.
Some observers and village officials worry the village is financially over-extending itself, committing too much money that can't be recouped before the incentive of the special taxing district expires.
"We have done more than we should," Trustee Frank Guagliardo said.
Village planners maintain, however, that no project is granted financial aid unless it stands a reasonable chance of success.
"Certainly there's risk involved, but we believe we've minimized that risk in our analyses," Village Planner Bill Enright said. "We don't want to give them a penny more than they need to get these projects done."
Tax increment financing means that taxes on property in a designated district are frozen at current levels. As development occurs, the property is reassessed, but the property tax actually paid remains at the old level.
The difference between the old level and what the redeveloped property would pay is used to pay certain development costs.
Once those costs are paid, or after 23 years, whichever comes first, the TIF district expires and taxing bodies like schools, towns and park districts reap the higher property tax revenue.
The first downtown TIF district expires in 2006, the second in 2009. …