Shopping Centers Today

DEC 2018

Shopping Centers Today is the news magazine of the International Council of Shopping Centers (ICSC)

Issue link:

Contents of this Issue


Page 65 of 99

66 S C T / D E C E M B E R 2 0 1 8 A TALE OF HOW PUBLIC-PRIVATE PARTNERSHIPS BY STEVE MCLINDEN TIFs, those venerable public-private development financing vehicles that have subsidized millions of square feet of retail in once-blighted areas, are aging up and, in many cases, retiring. By definition, a TIF (tax-in- crement financing) district uses anticipated future gains in property values, and sometimes sales tax, to finance the improvements that will help generate those very gains. Though opponents contend that TIFs divert money from schools and other uses, proponents counter that without them, developers would be unwilling to risk any private money to redevelop problematic land in the first place. When TIFs are executed well, they can create enduring financial muscle for governments, these supporters argue. Property taxes are frozen at their base when a TIF is formed. The differential amount between that base and the new taxes, called the increment, goes into a special fund administered by the taxing district. Most TIFs have a maxi- mum life of 23 years, at the end of which all obligations are paid in full and the taxes revert to taxing bodies. Some are retired earlier, and others are extended. "But the gift that keeps on giving is the sales tax," notes Robert Rychlicki, president of TIF consulting firm Kane, McKenna & Associates, in a recent article. HereŠSCTŠlooks at six long-term, successful TIFs. AURORA, ILLINOIS When the Chicago suburb of Aurora established Aurora TIF No. 2 in 1989, the targeted 140-acre parcel on Interstate 88 was assessed for about $228,000. Today that same acreage is valued at upwards of $92.5 million, and it has generated some $63 million in property taxes, according to Kane, McKenna & Associates, which ranks that TIF at the top of the 300 it has worked with in Illinois. The centerpiece of Aurora TIF 2 was the Simon-owned Chicago Premium Outlets. Before rolling out the 100-store first phase in 2004, the developer had to acquire the entire 140 acres merely to develop 50, with the balance then put to use for flood mitigation and wetlands. Offices were built too, and a comprehensive renovation of the mall, which added some 250,000 square feet onto the now 688,000-square-foot facility, was completed in 2016. The TIF is now retired, and the city receives in excess of $6 million per year in additional sales taxes. Chicago Premium Outlets, Aurora, Ill.

Articles in this issue

Archives of this issue

view archives of Shopping Centers Today - DEC 2018