Proposed Five Fifths TIF District In 5th Ward Gets Public Hearing

EVANSTON, IL — The Evanston City Council is set to hold a public hearing Monday on a proposal for a new tax increment financing district located mostly in the city's 5th Ward.

The proposed Five Fifths TIF District runs along both sides of Green Bay Road through the center of the city's historically Black business district. It includes the Lorraine H. Morton Civic Center, the Fleetwood-Jourdain Community Center and the Family Focus building, formerly Foster School.

TIF districts freeze the property tax revenue that goes to local taxing bodies at whatever valuation that property had at the moment the district was created. Any taxes generated by increases in the area's property values go to a new TIF fund.

Money from the TIF fund can only be used for a series of specified purposes, which include infrastructure improvements, affordable housing and redevelopment incentives for the developer. Spending more than $25,000 at a time from the fund requires City Council approval.

But with valuations frozen, other taxing bodies — primarily local school districts — only receive the additional income once the TIF district expires after a period of up to 23 years. In the meantime, those taxing bodies would have to raise rates on everyone, including those in the district, if they want to make up the revenue diverted to the TIF fund.

In February, the City Council authorized the hiring of the consultancy Kane, McKenna and Associates to draw up a redevelopment plan and lay out the legal justification for the district. The consultants produced a report finding that the area met six of the 13 qualifying factors laid out in state law, which requires the presence of at least three.

They are: obsolescence, deterioration, inadequate utilities, excessive lot coverage, lack of community planning and lagging EAV [equalized assessed value].

The consultants estimated that the area's taxable value will increase by somewhere between about 150 percent and 200 percent once redevelopment activities are complete.

In June, that plan was presented to a meeting of the city's Joint Review Board, which consists of representatives of all taxing bodies with boundaries in the district. Chief financial officers from Cook County, Evanston/Skokie School District 65 and Evanston Township High School District 202 all voted in favor of creating the district.

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Economic Development Manager Paul Zalmezak said the name of the new proposed TIF district references the clause in the U.S. Constitution that counts enslaved people as only 60 percent of free people for the purposes of representation.

"The 'three-fifths compromise' in the U.S. constitution may not have been an Illinois thing, but it is, in fact, in our country's constitution and this five-fifths name is symbolic of really making this part of the community whole again," Zalmezak said at the Joint Review Board meeting. "So it's kind of a clunky name, but it's meaningful, and it also represents the 5th Ward."

Zalmezak said city officials aimed to leverage the city's efforts to provide reparations for housing discrimination from 1919 to 1960, as well as opportunities for additional money from the American Rescue Plan Act, the $1.9 trillion federal relief bill approved in March.

"We're really trying to focus and use this as a financial tool to really focus on the events of last summer," he said. "And, really, the awareness that we as a community have now as it relates to Black entrepreneurship and the challenges — the structural racism and other issues pertaining to Black commerce in Evanston — and also the historic challenges with redlining."

The budget for the $89.25 million redevelopment plan includes the following:

• $24 million for improvements to public facilities, including capital costs
• $13 million for public improvements and infrastructure improvements
• $10 million for construction and relocation of public buildings
• $10 million for payments in lieu of property taxes to local school districts, as required by law
• $9.8 million for administrative and professional services
• $9.75 million for affordable housing construction and rehabilitation
• $6.2 million for cleanup, demolition and site preparation
• $3 million for interest payments
• $1 million for job training

The inclusion of the Civic Center within the proposed TIF district means the fund could get a significant amount of income should the City Council decide to relocate and all the new property tax revenue goes into the TIF fund.

"If the city government relocates from this site at some point, the property likely goes back onto the tax rolls. It begins generating tax for the City of Evanston," Zalmazek said. "Imagine if the building were to be sold to somebody else in the private sector and it was converted into another use, it was generating taxes, all of that money would come back into this TIF district."

Because the district is adjacent to the existing West Evanston TIF district, state law allows money to be moved by "porting" incremental tax revenues from one TIF fund to the other.

Monday's public hearing is required before the council can take up final approval of the ordinances formally creating the district. The first time the City Council can consider final approval of the district would be Aug. 9.