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LeROY — More communication between taxing bodies and LeRoy is the key to avoiding future problems with redevelopment money, the city administrator said, after tax increment financing money was mistakenly used for general fund expenses.

Now, the cash-strapped city must find a way to distribute about $700,000 to the LeRoy Fire Department, LeRoy School District, Parkland Community College District, LeRoy Park District and Empire Township in the next seven years.

“If we had to pay off all of the TIF money today, we would be about $700,000 short,” said City Administrator William Catalano III. “So we have to make sure this is taken care of before TIF I expires in 2018.”

A TIF district is a public financing method used as a subsidy for redevelopment and community development projects. Within a designated set of boundaries, increases in tax money are set aside to finance improvements that, in theory, spur future development.

Municipal general funds act as a checkbook of sorts, paying for salaries and routine bills.

There is no evidence of illegal activities, Catalano said, but stopped short of saying the TIF funds were mismanaged. Catalano became administrator in August, replacing Jeff Clawson.

“Rules are rules and I won’t comment on anything in the past,” Catalano said. “The potential was there for TIF funds to be used for ineligible expenses. But the large majority of TIF funds were used in an appropriate manner. Decisions that were made in the past were made with the best interests of the city and community at heart.”

The firm responsible for accounting procedures for the city’s two TIF districts, Kane, McKenna and Associates Inc., Chicago, said TIF money was responsible for the redevelopment of several properties and has boosted sales tax revenues by about 1 percent.

Because each city monitors its own TIF, rules are often left up to interpretation.

“The state sets guidelines and everyone tries to do the best they can,” said Robert Rychlicki, executive vice president of the firm. “With a new council in place and a new administrator, they are moving in the right direction, particularly because of a renewed emphasis to diagnose the situation, have more communication, and move forward.”

Jeff Lewis won a seat on the city council in the April 5 election and believes the city has benefited from the TIF structure.

“It’s an investment tool and should be used as such,” he said. “It’s really a big issue for every city and, because of its complicated nature, it’s not easily understood.”

Superintendent Gary Tipsord said LeRoy schools also have benefited from TIF districts.

“Since the TIF has been in place, we have picked up about 75 to 100 students and it’s been beneficial for us because it has facilitated community growth, which has put more kids into the classroom,” he said. “TIFs are somewhat complicated but we feel comfortable that everything is in place and we will get all revenue that is due to us.”

LeRoy has two TIF districts. The first encompasses the LeRoy Manor development and expires this year. The other, larger district includes the downtown business district and Interstate 74 corridor, and expires in 2018.


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