Thursday, March 16

City explores TIF district for west side

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[MARCH 16, 2006]  A representative of the company wishing to develop a residential subdivision on Lincoln's far west side appeared before the Lincoln City Council on Tuesday evening.

Doug Hanley from Central Illinois Properties said that the company wished to explore establishing a tax increment financing district west of Lincoln on Fifth Street. A TIF district would make it possible for them to build subdivision at the southwest corner of Fifth Street and Forest Hills Road.

Currently the acreage is farm ground located in the county, just outside Lincoln city limits. CIP holds an option to buy while they explore the possibilities of developing it as a residential subdivision. The property would also need to be annexed into Lincoln and rezoned from agriculture to residential.

Hanley said that CIP would like to pay for the site design and construction and infrastructure to the site and recapture those costs through a TIF. Dan Walker, who first brought the company's request to the council a couple of weeks ago, said, "The city has no upfront costs this way. The developer is paying all the infrastructure costs."

Projected costs that CIP would pay and ask reimbursement through the TIF:

  • $2.8 million site design and construction

  • $120,000 water lines to the site

  • $200,000 to over $500,000 city sewer to the site

The sewer line would cost less if it could come from the Sysco area rather than from the east along Fifth Street.

CIP anticipates asking reimbursement for those costs at between $3.6 million and $3.9 million.

In a TIF district the difference between the old property tax assessment and the new, developed property tax assessment goes into a fund, and the developer would be repaid for site development and infrastructure costs. The funds could also be used to pay the developer for other related costs, such as purchase of property. The parameters of a TIF are agreed on upfront between the government entity and the developer.

From each year's TIF income, a percentage would go to schools in the district; then the annual administrative costs are paid and the remainder goes to reimburse the company.

Currently, the developer would like to put up a 130-lot subdivision on 38 acres.

Houses would range from 1,300 square feet to 2,400 square feet and would go for $150,000 to $225,000.

Preliminary projections of selling 20 houses a year, averaging $175,000, is anticipated to generate $15 million in the TIF over the course of 23 years (the life of a TIF).

Each year roughly one-third would be taken off the top for schools and administrative fees; then, the remainder goes to repay CIP.

Careful consideration must be given to the effect on West Lincoln-Broadwell School and Lincoln Community High School. They are slated to receive 23 percent of the returning tax each year. However, how the schools can spend their portion is regulated by TIF rules. Specific percentages can be used for new construction verses other costs of operation, like staff, transportation and education materials.

A higher cut of the annual tax return to the schools could be set in the contract, but that would increase the payback time and costs.

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Under the initial proposal it is estimated that $5 million would go to the schools and $6 million to the city for use in the district during the lifetime of the TIF.

If home sales occur as CIP expects, and using proposed rates, CIP's costs would be paid back by 2019. The TIF could be closed out when that cost is paid back if desired. If it is not, the additional funds paid in up to the end of the 23 years are for use in that district.

In another consideration, the city could also opt to include adjacent properties in the TIF to entice other developers to build in the area. Mayor Davis and aldermen called on city engineer Mark Mathon to sort out where the city has jurisdiction along Fifth Street up to that point.

Several residents were present to express their view of the subdivision proposal or the TIF district.

Tom Tiffany:

Spot zoning is not desirable. It is inconsistent and incompatible in the district that now has R-1 zoning that requires 1 1/2 acres to build a home. Homes down the road have one-half- to three-fourths-acre lots. These would be small lots.

It would contribute to a storm drainage flow that is already a serious problem to other homes in the area, he said.

He also felt that such a high concentration of homes should include a park from the developers.

The city should consider home development at the old LDC grounds or some other sites that already have water and sewer. Property also exists across Old Route 66 that maybe the Scully family would sell, he said.

Bailey Climer, superintendent of West Lincoln-Broadwell School:

Climer, in summary, said that their school board is behind community growth as demonstrated by the agreement signed with Sysco. However, they are wall-to-wall students now, and the homes could bring in as many as 75 students. The capital development funds through the TIF may be sufficient, but they are concerned about the percentage that might come through for staffing and transportation. "There could be considerable expenditures in a five- to seven-year period that currently we don't have the capacity to address," he said.

The board stands ready to work with the developer and the city if the TIF is pursued.

Dr. David Kvitle and Gordon Josserand shared like concerns with the council, particularly over the influx of kids and high concentration of homes contributing to the watershed flood problems in the area.

Hanley said that they would look closer at the detention pond capacity and storm water issue with the design engineers.

The subject will be discussed further in committee on April 11 at 6:15 p.m.

[Jan Youngquist]

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