BACKGROUND

Recently the Village Board approved the Hickory Kensington Tax Increment Financing District. As part of the public process, a meeting was held on May 7, 2014, by the Joint Review Board, which consists of various taxing districts. One of the requirements of the TIF statute is that for TIF Districts that include residential units, the school districts must be reimbursed by TIF funds for students who live in the TIF and are newly enrolled in either school district. The payment is for residential projects that receive TIF funds, and are annual payments. The required payment amount is basically equal to the average cost to educate students in School District 25 and School District 214 and the statute does have a maximum cap so that no more than 40% of TIF increment funds have to be dispersed to the school districts combined in any one tax year.  

As part of the JRB recommendation to approve the TIF, School District 25 proposed that the Village enter into an agreement with the two school districts (25 and 214) which sets forth the mechanics of how these payments will be made. The Village is required to make these payments as a matter of the TIF statute, so this agreement simply sets forth the mechanics of said payments. With or without this agreement, the Village is obligated to make these payments.  

The Agreement was approved by School District 25 on July 17, 2014, and School District 214 on August 7, 2014.  

Staff supports this agreement as it addresses the request made by the JRB as part of their support for the TIF District. It is also beneficial to the Village to set forth the mechanics so that the Village and School Districts are on the same page regarding this requirement of the TIF statute.    

RECOMMENDATION

It is recommended that the Village Board adopt the Resolution Approving an Intergovernmental Agreement with School District 25 and Township High School District 214 regarding the distribution of Tax Increment Financing funds for the Hickory Kensington TIF District.