Businesses and schools in Berwyn are getting the push they need thanks to Tax Increment Financing (TIF). The government-appointed money has been helping the four TIF districts in Berwyn to fix run-down businesses, jump-start entirely new ones and help schools become more energy efficient.
Put simply, TIF Funds are the collection of tax increases that are set aside for the redevelopment of the district that the taxes originated from. Businesses or property owners may only apply for TIF assistance if their location is in a TIF designated district.
Dave Goldman, the owner of Tonini’s Italian Market, applied for TIF assistance to start his business on 6950 Windsor Ave. in 2008. Goldman had a popular standing in the community on his side after working in the area for over 20 years. He spent almost three months developing the business plan for his Italian specialty food store, which he then presented to the Berwyn Development Corporation (BDC) for approval. After the BDC approved it they presented the plan to city council where the final decision was made in a 7-2 vote. Goldman says he worked hard on his business plan because he didn’t want to present something that the BDC and Berwyn couldn’t stand by.
“I knew they didn’t want to put money in something that would fail. They need to see something they believe in,” Goldman said. “They want to see you succeed and to do that they need to know what you’re doing.”
Goldman wasn’t wrong. According to the BDC’s Urban Planner Kurtis Pozsgay it is clear from the beginning whether or not a business will be able to hold its own after it is funded.
“We will not push forward an application unless we feel the city would vote favorably for it,” Pozsgay said. “We can flush out a potentially bad application in the first meeting. If it doesn’t look like they would be eligible to get any funds, then I don’t want to waste their time or mine by going through the entire application process which can be about six months.”
Goldman was approved for $100,000 to begin building out a Depot District space. The money covered the very beginning of the process and Goldman says that without it he would have no business. But he still had to pay $200,000 out of his pocket to cover the rest of the construction.
The BDC also helps new businesses get their foot in the door. The corporation funds the grand opening and offers one free mailing to 5,000 homes in Berwyn. After being open for a year Tonini’s Italian Market is self sufficient.
“We’re doing pretty good and we’re meeting the bills. In today’s economy, that’s something,” Goldman said.
The four districts in Berwyn that receive TIF assistance are Roosevelt Road, Cermak Road, the Depot district and Ogden Avenue. The districts’ funds range from $1 million to $2 million , but that money doesn’t last forever. TIF funds do expire. Cermak’s fund expires this year, but due to a lag in property taxes, the money has until next year to be spent. Ogden’s fund will expire in 2016, but Depot and Ogden won’t wrap up until 2020.
There are requirements and conditions than an area must possess to qualify for TIF assistance. According to Illinois law, the area must have blighted conditions, which means there must be noticeable decay due to neglect or lack of finances. The most decisive factor comes in the form of the “but for” test, if a project can’t move forward but for receiving TIF funds, then it is eligible.
In some cases the area isn’t that bad off. The Berwyn South School District 100 used their TIF assistance for improvements that were more efficient and less aesthetic.
The school, located in the Ogden District, didn’t get quite the overhaul that Goldman’s market did. Instead school officials used the $217,000 they received to completely replace all the old windows and doors making for a more energy and cost efficient winter. The school received all the money that was requested in April 2010 and managed to finish construction by August 2010.
Assistant Superintendent Tim McGinnis was especially pleased with the ease of applying for TIF assistance.
“The application process was simple and the BDC was incredibly cooperative, we had nothing but a good experience,” McGinnis said.
TIF funds cover a wide range of redevelopment projects. Schools, restaurants, toy stores and alleys are just some of the most recent. According to Pozsgay, TIF funds are an invaluable tool that bring business and prosperity to the city.
“Cities are very limited in the way they can encourage economic development,” Pozsgay said, “The city would be hard pressed to do the major improvements such as streetscape work and underground utility upgrades without this program. New businesses such as Jimmy John’s and the Culver’s opening next year would not have chose Berwyn without the help of the TIF.”