Niles village trustees approve water hike to align with inflation, consider TIF giveaways for project

Chicago Tribune

04-03-2025

The Niles Village Board considered items at a recent board meeting that would have significant financial impact on the north suburb's local economy.
Two major items on the agenda at the board meeting were rate changes for water and sewer service that would help Niles cover the cost of two major projects, and a resolution regarding over $2 million in tax increment financing incentives for a redevelopment project on Milwaukee Avenue
Water rate increases had been discussed for years, according to a village staff memo explaining the current increase.
The memo noted that since 2015, inflation has increased nearly 10 times the water rates in Niles. Inflation has increased 32.3% in that time period compared to a 3.3% increase in water rates.
Trustee Morgan Dubiel said during that Jan. 28 meeting that the biggest motivator for the rate increase is to shore up funds for two major projects in the coming year: A new pumping station and replacing old service lines that contain lead.
Dubiel said Niles needs $83.6 million to cover the two projects. He said the lead service line replacement alone, which Niles is required by state law to begin work on in 2025, is expected to cost approximately $69.
Dubiel said that setting up longterm rate increases now will help keep utility costs lower in the future because it will allow the village to secure an interest-free loan from the state for the project.
'We have to prove we can pay it back,' Dubiel said.
He also noted that the proposed increase would still leave Niles water rates about $20 lower than other nearby towns.
The new rate structure will also include a monthly user fee.
The board also approved a non-binding measure related to $2.2 million in potential tax increment financing incentives.
The vote was on a non-binding project plan for Palms Market to create a mixed-use development anchored by their new location at 8905 N. Milwaukee Ave.
The plan describes the project as a two-story, mixed-use development that would include a grocery store with a dine-in restaurant on the first floor and residential apartments on the second. The project's renderings also show that 1,400-square-feet would be available for retail tenants.
The vacant lot at the corner of North Milwaukee Avenue and Ballard Road has been described as 'blighted.' The developers estimate the project will cost $5 million to build and requested $2.2 million worth of 'pay as you go' incentives from the Milwaukee-Dempster TIF district.
Economic Development Coordinator John Melaniphy said the project falls perfectly in line with the village's comprehensive plan. He said the scope of the project complements the intended use of TIF funding, and that the developers were not in a position to complete the project without it.
'They cannot move forward with this project without the assistance of the village,' Melaniphy said.
But the $2.2 million request caught Dubiel's attention.
He pointed out that 'the money comes from existing businesses, and it's going to one private entity. It's the highest I've ever seen.'
Trustee Craig Niedermaier pointed out that TIF funding doesn't come from the village's budget but from the TIF's own account, funded with the excess revenue driven by the economic growth the TIF itself creates.
'The village doesn't sign a check,' said Niedermaier.
The Milwaukee-Dempster TIF district was established in 2018. Since then, it's yielded $1.4 million in cumulative revenue, according to the most recent publicly available yearly report.
The fund's balance is less than $1 million. But, the requested $2.2 million in incentives would not be paid out all at once, according to village officials. The developer would have to apply for cost reimbursements as they accrue, and the project would have to be completed in two years.
The financial impact of the project includes an estimated $65,000 in property taxes annually, $150,000 to $200,000 in annual sales taxes, along with creation of 12 to 15 new full-time jobs – amounting to about $1 million in annual pay wages, according to the TIF application filed.