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TO: Mayor Richard C. Irvin
FROM: Martin S. Lyons, Chief Financial Officer/City Treasurer
DATE: February 7, 2020
SUBJECT:
An Intergovernmental Agreement between the City of Aurora and The Indian Prairie School District 204 governing the use of Tax Increment Financing incentives and economic development communications between the City and District 204 for development activity in the Route 59 Corridor area.
PURPOSE:
Economic Development in the Route 59 Corridor including the Fox Valley Mall area is a top priority for the City of Aurora. This development can often involve the utilization of various development incentives with developers, and some of these incentives such as Tax Increment Financing (TIF) can involve other taxing bodies such as School District 204 (District 204), College of DuPage, etc. The creation of an intergovernmental agreement will help define some of the eligible incentives to be used by the City and avoid any conflict/litigation with overlapping taxing districts.
BACKGROUND:
In early 2019, the City approved a redevelopment agreement (RDA) for the development of the triangle bordered by Route 34, 75th street, and the planned Commons drive extension. This RDA included the creation of a TIF district for the funding of the Commons Drive extension and stormwater retention expenses to develop the property. District 204 had previously noted their objections to the use of TIF districts when the City explored this option for the Pacific Square development at New York and Route 59. As a result of general concerns over economic development activities, the City invited all school districts to meet on a quarterly basis to discuss overall city economic development and specific developments in their respective districts. These meetings are ongoing.
At the Joint Review Board (JRB) meeting mandated for the adoption of the Ogden Ave and 75th Street TIF, the board had a long discussion regarding TIFs and development in the Route 59 corridor. As a result of this discussion the City and District 204 committed to the drafting of an intergovernmental agreement (IGA) to address development incentive concerns and set policy/guidelines for the use of incentives in the Route 59 Corridor. In December and January the City and District 204 worked to create this IGA.
DISCUSSION:
The attached IGA between the City and District 204 is the result of several meetings and negotiations between the parties to develop an incentive policy within the Route 59 corridor. This IGA is exclusive to this area as defined in the recent Route 59 Corridor Study as attached. The purpose of the IGA is to build cooperation and communications between the City and other taxing bodies regarding the use of a variety of tax incentives for development. The main focus of the IGA is the use of Tax Increment Financing. The main terms of the IGA are as follows:
1) 10 year term
2) All RDAs created during the life of the IGA are subject to the IGA, even after expiration of the IGA. In other words, if an RDA lasts longer than the IGA, it will still be governed by the terms in the IGA.
3) The IGA limits the duration of TIF districts within the Route 59 corridor area to 15 years (the state limit is 23 years)
4) All property tax increment from any student producing residential development within a TIF district within the Route 59 corridor will be determined as surplus each year.
5) TIF incentives will not be utilized as a first source for development incentives and the City commits to analyzing other sources whenever possible before accessing TIF as an incentive
During negotiations the City and District 204 considered other options to limiting the length of TIFs, to include immediate revenue sharing of TIF revenues over a 23 year period. After much discussion, these other methods of sharing and limiting the impact of TIF incentives were not included in the agreement, but the City is not precluded from such sharing if the development can support this structure. The agreement also includes a provision that District 204 will not sue the City to prevent a TIF from being created in the Route 59 corridor, but if it choose this option then the agreement is void for the given TIF in question. In short, if the District takes legal action to stop a TIF in the corridor, then the City is free to make the TIF a 23 year TIF with no residential restrictions and without regard to the agreement. Such legal action will not void the total agreement, just suspend it for the given TIF.
This agreement will allow the City to move forward with a variety of development opportunities in the corridor, taking a balanced approach to incentives. District 204 is set to review this agreement at their February 10, 2020 meeting.
POLICIES AND GUIDELINES / IMPACT STATEMENT:
This IGA will create policy guidelines for development incentives in the Route 59 Corridor.
RECOMMENDATIONS:
Staff recommends the City Council approve this resolution and the attached IGA as presented.
ATTACHMENTS:
cc: Finance Committee
CITY OF AURORA, ILLINOIS
RESOLUTION NO. _________
DATE OF PASSAGE ________________
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A Resolution Authorizing an Intergovernmental Agreement between the City of Aurora and The Indian Prairie School District 204 governing the use of Tax Increment Financing incentives and economic development communications between the City and District 204 for development activity in the Route 59 Corridor area.
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WHEREAS, the City of Aurora has a population of more than 25,000 persons and is, therefore, a home rule unit under subsection (a) of Section 6 of Article VII of the Illinois Constitution of 1970; and
WHEREAS, subject to said Section, a home rule unit may exercise any power and perform any function pertaining to its government and affairs for the protection of the public health, safety, morals, and welfare; and
WHEREASThe City of Aurora and Indian Prairie School District 204 mutually support the development of the Route 59 Corridor and:
WHEREAS, the City and the District agree that development incentives should be considered in accordance with the principles outlined in this Intergovernmental Agreement as attached,
NOW, THEREFORE, BE IT RESOLVED that the City Council of the City of Aurora, Illinois, approves the Intergovernmental Agreement with Indian Prairie School District 204 as attached and authorizes the Mayor and his designees to execute this agreement.