TIFs and Public Library Districts in Illinois

This interpretation of state law regarding reimbursement to public library districts serving residents in tax increment financing (TIF) districts was initially prepared by then-ILA Legislative Consultant Kip Kolkmeier in 2016; it has been reviewed for currency and updated in September 2019 by ILA Legislative Consultant Derek Blaida. Changes in statute since 2016 are not material to the substance of the underlying law; they reflect extensions to existing TIFs and other changes of that nature.

Below please find the legal requirements for a public library district to seek reimbursement, and the obligations of a local municipality to provide reimbursement.

TIF districts are established by municipalities to encourage redevelopment of blighted areas. The municipality designates an area to be redeveloped, and approves a redevelopment plan. The property taxes on the blighted area are essentially frozen and local taxing districts do not receive property tax revenues resulting from an increase in property tax assessments on new development in the TIF district. Property tax revenues from new development, called the “tax increment,” are used to further redevelopment in the area. The law allows certain costs to be paid from this increment. Typically, those costs are expenses that a private developer would not be willing to pay. Under the law, “but for” payment of these costs, the blighted area would not be redeveloped.

The TIF statute was amended in 1999 to provide a formula and process for schools to be reimbursed from TIF districts including residential development. Applying the same rationale, the TIF statute was amended in 2004 to provide reimbursement to public library districts as well.

The relevant law on this subject is found at 65 ILCS 5/11-74.4-3(7.7).

Under the law, the following is clear from the plain language of Section 7.7:

—Library districts are entitled to reimbursement if serving an area containing TIF assisted housing units in TIFs created after January 1, 2005, and existing TIFs that add assisted housing after January 1, 2005;

—The amount paid to a library district shall be based on the number of persons eligible to obtain a library card based on the assisted housing units;

—The amount of reimbursement shall be the per-patron cost of providing library services. The per-patron cost shall be the Total Operating Expenditures Per Capita for the library in the previous fiscal year, but cannot exceed $120 per patron based on this formula;

—There is no right to reimbursement unless the library district is in a “tax capped” area or cannot increase property taxes without a referendum; and

—A library district must provide convincing evidence to support its request for reimbursement, and must do so after July 1 and before September 30 of each year.

Based on the entire record and a reading of the plain language of the statute, it is clear public library district reimbursement must be based on the number of persons eligible for library cards in the residential TIF, and not the number of actual library cards issued to persons in the TIF. The word "eligible" necessarily means more than those who applied for and received library cards. To require reimbursement for only the number of actually issued cards would be directly contrary to the plain language of the law.

(Please note that this post provides legal information but does not constitute a legal opinion. It should not be treated as legal advice. Please consult with your own legal counsel for legal advice regarding your particular situation.)

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