Developers ask city for TIF district to develop a west-side subdivision

[MARCH 2, 2006]  A Bloomington firm, Central Illinois Properties, is looking at developing a subdivision at the southwest corner of Fifth Street and Forest Hills Road. The company came before the council on Tuesday asking for a tax increment financing district for the property so as to cover infrastructure and other qualifying costs.

Dan Walker, an attorney who handles economic development matters for the developer, explained how a TIF works and how it would be done here. It is basically a tax rebate program that helps small communities grow, he said.

The proposed subdivision is currently farm acreage just outside of city limits. The company intends to request annexation into the city of Lincoln and run water and sewer lines to the homes.

He explained how the TIF district works. All property has an equalized assessed value that determines the taxes that are paid on it each year. One-third of the assessed value is multiplied by 8 percent or 9 percent here. When the property is developed, its value goes up. The city's portion of the tax difference between the old EAV and the new EAV on the property would go to TIF district fund. Under a contract between the city and the school, the schools would be given a portion of those funds, and the remainder, to an amount or time limit, would return to the developer to pay back the agreed incentive and infrastructure expenses.

Preliminary engineering estimates to run sewers and water lines to the subdivision indicate that it would take about a half million dollars. Other qualifying expenses in a TIF might be streets, sidewalks, curbs and a walking path, if you were to determine that was necessary out there, Walker said.

The development would bring new students. Walker said that they have already met with the schools here, and he recommends that the contract the city would need to negotiate with the schools be at about 20 percent to 25 percent of the new tax dollars. This would fill the gap and alleviate the impact. The remaining 75 percent of the new TIF dollars would then go to the developer. They are willing to negotiate these figures.

The typical TIF district lasts 23 years. The developer may be paid off early, but the TIF district would remain in effect for the time agreed on and the additional funds must be used in the district.

The developer has had an option to buy that has just been renewed for another 30 days.

However, Walker said the developer has no interest here if they cannot have the TIF district.

Dean Langdon, superintendent at LCHS, addressed the council. He said he didn't dispute the facts and the details of the TIF district. He thinks the reduction of over 200 students at the high school in the last 10 years underscores the need for growth. He recognized that the West Lincoln-Broadwell School is in a different position; they are nearly at maximum capacity. So our circumstances are different, he said

He cautioned the council that the risk we are talking about lies with the schools. If the council decided to go forth with the TIF process, the high school would like to be a part of the negotiation. The flow-back dollars to the school district is very important to us, he said.

In the high school they have not seen any increase in state or much in federal aid in the last 10 years, Langdon said. "Our only increase in revenues have been with that related with EAV," he said. "And what this does is continue to eat away at growth in our community from an EAV standpoint, which is the only way we continue to gain additional revenue."

When you have an increased assessed value that goes back into the TIF district for use by the TIF district, there's a negotiated amount that goes back to school districts. That dollar amount is very important to us and WL-B, Langdon said.

He said he didn't know if 20 percent or 25 percent would work for either school. He would be interested in seeing the estimated dollar amounts.

Dave Golwitzer addressed the council and identified himself as a representative of the Woods Foundation. The foundation owns property across the street from the proposed subdivision.

He also cautioned the council about the risks associated with tying up money for infrastructure to that area and possibly hindering future development. [See his view in today's letters.]

He also suggested the council examine other components of the subdivision to be sure it is what they want: What does it look like? Are the roads wide enough to turn a firetruck around? With 130 lots, you could double the size of the West Lincoln School with no revenue to pay for the school.

"I'm pro-development," he said. "But be careful what you're going to get, because you might not like it."

Roger Matson, a West Lincoln-Broadwell school board member, said that they have been talking about this, and he confirmed what Langdon had said. "Our school district is to the max, and that is one thing we have to worry about," Mattson said.

Another WL-B school board member, Augustus Scott, confirmed Matson's comments that it is very important that enough tax dollars come back into the school district to support any new students. The school is "already in dire straits," he said.

Matson asked for a time frame for building, how many houses they want to start building, and if there is a time frame for how big they're going to get and how fast.

Alderman Busby said that at a recent meeting, the developer said they were going to start with 20 or 30 homes.

The developer would like to "turn dirt" this spring, Walker said.

In another related matter, city attorney Bill Bates told the council that he thinks he should excuse himself as legal counsel for the city on this matter. He explained that there has been some discussion of including the commercial ground across the street from the proposed development, which is owned by the Woods Foundation. Also the sewer and water lines would benefit that property.

Bates serves as president and as a member of the board of directors with the Woods Foundation. This could be a conflict, as the interests of the foundation may not coincide with the interest of the city, he said.

After some discussion, Mayor Beth Davis said that they would take it into consideration to find other legal counsel.

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