Monday, June 04, 2012
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City to vote on 1st step of establishing TIF district

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[June 04, 2012]  Tuesday evening Mayor Keith Snyder asked that the city add to this week's voting agenda a motion to proceed with the first step of developing a TIF district in Lincoln.

The city has been discussing establishing a tax increment financing district since March, when the idea was brought to the council by Lisa Kramer of Prairie Engineers and John Myers of Rabin & Myers in Springfield.

Snyder told the council he wanted to do some artwork for them, drawing a picture of how a TIF district could benefit the city.

Recently the city approved a preliminary downtown revitalization plan and hired Kramer and her firm as the city's consultants on the project.

The revitalization plan is being funded by a $675,000 grant the city won from the Illinois Department of Commerce and Economic Opportunity.

Snyder began by creating a space for the revitalization plan at the bottom of his page. He explained that the plan was the first step and the foundation for enhancing the downtown area.

Of the grant awarded for the project, approximately $336,000 will be used for the development of the plan.

Because the city has to provide a local match of $100,000 with the grant, Snyder explained there will still be just over $400,000 remaining that can be used for implementation of programs that come from the plan.

He drew the first section of a bar graph on the left-hand side of the page and said it represented the implementation.

To the right of that bar he drew a second one and marked it with the figure of $1,800,000.

Snyder explained the figure represents a grant the city is applying for that would go toward the downtown revitalization projects. This grant is strictly for implementing projects that can be undertaken according to the revitalization plan. He said the dollars involved would cover the cost of rehabilitation of 20 blocks of the downtown area and would have to be spent within three years of the award.

He recalled to the council the streetscape plan that was introduced in August of 2010 by the city and Main Street Lincoln. The plan presented at that time was a draft of what the city could do and was not a set-in-stone plan.

Snyder said the money could be used to implement that plan or something similar.

Lastly, he drew a bar to the far right and indicated it represented dollars that could be earned from establishing a TIF district. 

He told the council that while the first grant will expire in 2013, and the second, if won, lasts only three years, the TIF program has a shelf life of 23 years.

The advantage to the TIF money is that it is less restricted on how it may be used.

For example, the first grant for the revitalization plan stipulates that the money must be used primarily for developing a plan.

The second grant, if won, would have restrictions on the types of projects it can be used for, and the city will not be allowed to stray from that for fear of losing the grant.

The TIF dollars, however, would be under the city's jurisdiction, and the city would have much more control over what the money is used for.

The primary restriction with the TIF is that it is for rehabilitation in the downtown area.

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How the city will make money from the project is in the increase in property tax revenues from rehabilitation of downtown structures.

It had been mentioned in March and was repeated last week that right now property assessments in the downtown area are down considerably, primarily because of the age and condition of many of the buildings.

The TIF would provide financing to business or building owners to do needed structural and cosmetic repairs on their properties. Once those projects were completed, hopefully the assessed value of the buildings would go up.

The city would be allowed to claim the increase in the tax assessment. Snyder said the city would have a base year they worked from. As property values increased, the new assessment would be weighed against the assessment of the base year, and the city would claim the difference.

Snyder said, however, that before the city can establish a TIF, a feasibility study needs to be conducted to determine if the city should establish a district.

Kramer and Myers have proposed to do the study. In doing so, they will map out the city in grids and go from building to building, determining whether or not that particular structure would qualify for rehabilitation.

When Myers visited the council in March, he provided a "TIF Primer" that outlines how the district would or could be established.

In his primer he offered the following abbreviated definition of how a structure would qualify as a "Rehabilitation TIF District."


2. How Property Qualifies For TIF Treatment

The list of qualifying factors for a TIF is long and complex (see Exhibit A to this primer for how a "blighted area" TIF qualifies), but it boils down to this: The property must have some combination of old and obsolete structures on it, inadequate utilities, obsolete platting, environmental problems, and declining value. Normally, a TIF consultant analyzes each and every separate parcel in a proposed TIF District to advise the sponsoring municipality whether the proposed district as a whole qualifies. This is where the TIF consultant earns his or her fee!

Snyder told the council Tuesday night that the first step needs to be the feasibility study, and he would like the aldermen to vote on whether or not to hire Kramer and Myers to do the study. The cost would be $25,000, plus an additional $10,000 will be needed for legal and engineering expenses for work that would have to be done prior to the adoption of an ordinance.

The city has tentatively agreed to use funds that are on hold from an old DCEO revolving loan program and have been dormant for several years. Currently, the city is in the process of getting permission from the state agency to dissolve the program and incorporate the funds into the city's general operating account.


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