Bill would require disclosure of jobs created in tax-subsidized developments
A bill that passed Wednesday in the Illinois House would set more stringent disclosure requirements for towns subsidizing development through local taxing districts.
The proposal by state Rep. Jonathan Carroll, a Northbrook Democrat, would require municipalities to report to the Illinois comptroller the number of jobs expected to be created in a tax increment financing project, as well as the number of jobs actually created.
The municipality also would have to report the amount of money expected to be raised from the project and the amount actually raised. All of the data would have to be verified by a third party chosen by the city or town.
HB 571 passed in the House 114-1 Wednesday. The new requirements would begin in 2022 if they become law. State Rep. Brad Stephens, a Rosemont Republican, cast the only "no" vote.
Tax increment financing is a form of tax break typically given to private land developers and designed to revitalize an area or spark development of downtown or historic districts. In a TIF district, property values within a defined area are frozen at a base level. As the area is developed, taxes that would have been generated by the increased property value are invested back into public improvements benefiting the development.
"We have to make sure that when people are using TIFs that transparency surrounds them," Carroll said. "We want to make sure that whenever anyone gets involved with a TIF more information is available (to the public)."
Carroll picked up the legislation after the comptroller's office approached him about the issue.
"We generally hear feedback on TIFs, and people are always kind of confused by them and really don't understand how they work or why they have been done a certain way," Carroll said. "This bill allows for more transparency so people can have more understanding."
Before beginning the development project, municipalities would also have to submit to the comptroller a taxing district analysis conducted by a third party detailing the "nature and term of obligation" of the project, as well as any projected or actual debt accrued by the project.
If the municipality does borrow to complete the development, it would have to show both the comptroller how and when the debt is being paid off.
Republican Rep. Deanne Mazzochi of Elmhurst raised concern on the House floor that a "smart TIF lawyer" might be able to take advantage of language in the legislation on the reporting of the money actually raised from the project and "drive a truck through it." Mazzochi, who voted "yes" on the legislation, said she worried someone might find a loophole in the bill but "fully supported" the reporting requirement itself.
"Hopefully, this can get fixed in the Senate," Mazzochi said.
Carroll's bill will be reported to the Senate floor for a first reading. A date has not yet been set.