Let’s say you have a great retail project.  The municipality is committed to helping make it happen and has pledged sales taxes on a pay-as-you-go basis. But it looks like you will need more cash upfront than you thought because you need to do roadway improvements.  The City can’t sell bonds based on the sales tax pledge because they are not home rule. Is there any way for the City to issue sales tax bonds so you can receive some upfront funds?

Yes, assuming the site meets the statutory requirements (a less stringent “blight” finding), the City could form a Business District, levy a Business District sales tax (not to exceed 1%) and, under that statute, have the authority to sell bonds for the roadway improvements. Remember, the Business District sales tax is a self-imposed tax and you may have some resistance from your retailers.

Today, the Chicago City Council approved an Ordinance proposed by Mayor Daley that creates the “Vacant Building TIF Purchase and Rehabilitation Program” to provide incentives to first-time homebuyers in the City.  As mentioned in a previous post, the Program is designed to provide TIF funds to homebuyers with total household incomes of less than 100% of the Primary Metropolitan Statistical Area Median Income to purchase and substantially rehabilitate eligible properties.  In order to qualify, a property must be vacant, require substantial rehabilitation, contain fewer than four dwelling units, and be located in one of Chicago’s approximately 150 TIF areas.  TIF funds would be available to pay amounts up to 25% of the total cost to purchase and substantially rehabilitate the property.

A homebuyer interested in receiving TIF assistance from the Program must submit an application to the Department of Housing and Economic Development to demonstrate eligibility.  If the applicant is eligible, the Department Commissioner will determine the amount of assistance to be provided.  If the applicant receives assistance, the applicant is required to occupy the property as a principal residence for a certain period of time (between 5 and 15 years, depending on the amount of assistance received).

The Vacant Building TIF Purchase and Rehabilitation Program goes into effect immediately.  While it is unclear how it will be administered and how the occupancy requirement will be enforced, this Program represents the first time that TIF incentives would be targeted toward homebuyers in the City of Chicago.

Currently under Wisconsin TIF Law, Wisconsin towns are prohibited from using TIF for retail projects.  However, Gov. Scott Walker recently signed a bill into law that allows the Town of Brookfield to use TIF to support a 600,000 square foot retail and office development designed to replace an empty home improvement store and a former movie theater.  The bill was adopted unanimously by the Wisconsin Senate and passed by a voice vote in the Wisconsin Assembly.  Another Wisconsin Town, Cedarburg, is also looking to expand its TIF authority to enable it to use TIF for retail development.

When the Governor was asked whether he would support changing the TIF law to allow other Wisconsin towns to use TIF for retail development, Gov. Walker said that he would consider such a change because he believes that TIF Districts are powerful economic development tools to help communities create jobs.

Special Service Areas are geographic areas with specific boundaries created by a municipality for the purpose of providing special government services such as  infrastructure, street lighting, community gathering space or parking facilities.  A special service area tax is levied is the area by the municipality not to exceed 1%. Representative Jack Franks has proposed legislation (HB 0269) requiring authorization,  evidenced by a signed petition by 51% or more of the electors residing within the SSA  and 51% of the owners of record of the land located within the SSA,  before a municipality may create  or enlarge an SSA , before a tax may be levied or imposed,  and before bonds may be issued. Currently, such actions may be taken after notice and a hearing, unless a petition is filed objecting to the action.

In short, this legislation requires an affirmative agreement of the majority of landowners and electors residing in a proposed SSA area to create an SSA  and to impose a tax.  This requirement would make it more difficult to establish SSAs even when the municipal officials consider them necessary and in the best interests of the area residents.