ROCKFORD--Tax increment funding has been a major weapon for city leaders seeking to spur economic development.
However, the latest report says the idea has been a massive failure with seven districts in the red, and projected to cost taxpayers more than $8 million.
"TIFs are designed to encourage industrial and commercial development," Mayor Larry Morrissey said after today's Rockstat meeting.
Yet in Rockford's most financially struggling tax increment financing district, development isn't happening. The report from Finance Director Chris Black says the River Oaks TIF District has lost $3.3 million to date. Aside from the apartment complex in recent years, no businesses have set up shop in the district.
Morrissey says we're paying the price for a tough economy.
"Harder hit areas of the community are areas that have lower income, higher degree of poverty," Morrissey said. "They've suffered more declines in their overall property evaluation which is impacting everyone."
The report looks grim, but city officials say business were on target for the last quarter.
"We were on task for the number of businesses we assisted and jobs created," said Jovita Donahue, Development Coordinator. "We do this through any TIF assistance we provide."
"We've seen 100 percent change. In other words, the entire market has been infected and impacted in a way that we didn't anticipate. No one anticipated."
In today's Rockstat meeting, city officials also noted that the city has $333,000 tied up in loans with businesses along the Stateline and four of them are currently deliquent. Combine all that with the forfeiture of $300,000 in federal funding, it's been a very difficult financial week for Forest City leaders.
Meanwhile, in the Preston and Central TIF district, Ace Recycling received it's notice from the city today.
It's water will be shutoff in 5 days.The report label less than one in three 'successful.' Morrissey says the failure of TIFs is because no one could have predicted Rockford's crash in property values.