- Feb 19, 2019
Possible changes to Northbrook Court have captivated public attention in recent months. Brookfield Properties, the shopping center’s owner, and residential developer Ryan Companies have proposed a dramatic reimagining of the western end of the center: the demolition of Macy’s making way for new retail, restaurants, a supermarket, public open space, and a 315-unit luxury apartment complex. Costs for the project are estimated at $250 million.
To offset part of that hefty price tag, discussions are underway to consider a public/private partnership including $21.5 million in tax increment financing (TIF) and an additional $5.5 million in partial sales tax rebates. How do these public financing mechanisms work, and why would the Village want to participate?
As Village President Sandy Frum noted in her State of the Village address, Northbrook Court is an essential element to the health of the Village, as the source of 25% of sales tax revenue generated for Northbrook. The status of Northbrook Court also impacts the well-being of neighboring businesses and residential property values. Tax increment financing is a funding strategy that helps local governments attract private development, without increasing property taxes. Municipalities can create a TIF district within which the assessed valuation of taxable real estate is frozen at the adoption of the TIF. Then, for a set number of years, taxing bodies — the Village, school districts, park district, and other entities – continue to receive revenue based on that set valuation. Growth in property tax revenues in the TIF District above the “base” valuation is put into a separate fund, maintained by the Village to pay for public investments and redevelopment costs within the TIF District.
Separate from the TIF, the proposed sales tax rebate of $5.5 million will have a built-in protection of the Village’s existing tax base. The Village will first determine the current tax base at Northbrook Court for sales tax generation, and will also calculate increased costs in Village services (such as police and fire protection) connected to the new development. The sales tax rebate would only apply on amounts above the existing tax base and the predetermined municipal service increment.
In January, the TIF District proposal was referred for consideration to a Joint Review Board of interested taxing bodies. A public hearing will be held at the Village Board Meeting on April 9. Meanwhile, the Plan Commission is working separately on elements of the proposal under its jurisdiction.