Approximately 80% of the total revenues received by Oak Park and River Forest High School District 200 are derived from local real estate taxes. Therefore the Board of Education’s decision regarding the tax levy is the main driver in determining future fiscal stability in the District.
The high school has sought to contain property tax growth for the past six levies, as illustrated in the the first chart. Since 2013, the District has levied $46 million less than it was entitled to receive under the law, and the 2018 levy is less than the 2011 levy.
On Dec. 19, 2019, the District 200 Board of Education approved the final tax levy for 2019 of $71.3 million, broken down as follows:
- Increase of $1.3 million, equal to Consumer Price Index (CPI) of 1.9%
- $1.7 million abatement to taxpayers from fund balance
- Expiring TIF dollars of $3.8 million
- $0.4 million of new property value
What follows is additional information about the 2019 levy, including an explanation by Oak Park Township Assessor Ali ElSaffar of the impact of expiring TIF districts on OPRF.
How does the levy process work?
Tax cap laws allow school districts to levy up to the amount of the Consumer Price Index (CPI), which for 2019 is set at 1.9%. Additionally, the District is allowed additional dollars in the levy from expiring tax increment financing (TIF) and taxable new property.
What is a TIF district?
Tax increment financing is a tool used by local governments to encourage economic development in specific geographic areas. At the beginning of the TIF, the equalized assessed value of properties within the TIF district is frozen. As property values within the TIF district increase, all property tax growth above the frozen amount - the incremental value – is diverted from taxing bodies to be used for redevelopment projects within the TIF district. (See second chart.) These incremental taxes collected in the TIF districts have been paid directly into a TIF account held by the Village of Oak Park.
When the TIF expires, taxing bodies that formerly were limited collecting taxes based on the frozen property value have one opportunity to capture tax revenues generated from the growth in property values. This is a return on investment for the taxing bodies that have foregone the ability to levy additional taxes on increasingly valuable property for more than 20 years. Two of the Village’s tax increment financing (TIF) districts – Madison Street and Downtown – are expiring at the end of 2019. When the Downtown and Madison Street TIF districts were frozen, their properties were valued at approximately $43.8 million. In 2018, the TIF properties were valued at approximately $157.7 million.
If all new growth in property value within a TIF district is attributable to TIF, then taxing bodies do not lose any revenues and taxpayers do not have higher tax bills than they otherwise would have had. In these circumstances, TIF has performed perfectly—creating growth when no growth would have occurred. At the end of the life of the TIF, taxing bodies and taxpayers benefit from the expanded tax base.
How do Oak Park’s expiring TIF districts affect the 2019 levy?
The taxing bodies included in the TIF areas, including District 200, have not collected taxes on the property value growth in the Madison Street TIF for more than 23 years and in the Downtown TIF for more than 35 years. With the TIF districts expiring this year, District 200 has one opportunity to capture the $3.8 million revenue that the District has been unable to collect since the inception of these TIF districts. This action would also preserve the opportunity to capture those revenues in future years. If those revenues are not included in the 2019 levy, that opportunity is lost forever. The capturing of this revenue is a shift in tax dollars from the TIF district back to the taxing bodies, including District 200. This will not result in an increase in taxes for taxpayers outside of the TIF.
Impact of TIF District Expiration on D200 Tax Rate and Tax Bills
Click here for information prepared for the district by Oak Park Township Assessor Ali ElSaffar.