Thursday, March 29, 2012
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Discussion continues: Should Lincoln establish a TIF district for downtown?

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[March 29, 2012]  On Tuesday evening the Lincoln City Council continued its discussion regarding whether or not to establish a tax increment financing district, or TIF, in the downtown area.

The suggestion of a TIF district was first introduced to the council at the March 13 meeting by Lisa Kramer of Prairie Engineers and John Myers, an attorney with Rabin & Myers in Springfield.

Myers has considerable experience in representing municipalities in forming TIF districts and led most of the discussion on the topic. He explained the advantages of the district in that it assists with economic development and, in the case of Lincoln, in rehabilitation of the downtown area.

Myers also answered several questions from aldermen, most of which dealt with what aspects of the proposed TIF might be upsetting to area schools and local citizens.

In the case of the type of program Myers and Kramer were discussing with the city, Myers said the rehabilitation TIFs seldom cause a problem for schools because they don't produce increased student populations.

He also noted a misconception of many citizens that establishing a TIF district would mean an increased levy on property tax. It does not.

However, what it does mean is that taxes collected are redistributed, with a portion going to a specific fund, which finances the daily operations of the city.

This week, Mayor Keith Snyder asked aldermen if they had received any feedback from the public on the establishment of a TIF district.

Alderwoman Melody Anderson said she had talked to a few people, and her impression was that they were not overly concerned about it, perhaps not even really all that interested.

The consensus seemed to be that because constituents understood this was not a program that would increase their property tax bills, they were not voicing opinions on it one way or the other.

Snyder said he hadn't gotten any comments on it, and he had spoken with District 27 Superintendent Mary Ahillen as well as Lincoln High School Superintendent Robert Bagby about the idea.

Snyder said what he needed to know next was the thoughts of the council: Should the city move forward in the process?

In order to establish a TIF district, there would first need to be a study of the downtown area to see that it qualifies specifically for what would be a rehabilitation or revitalization TIF program.

To qualify, the city would be divided into parcels and each parcel examined by Myers and Kramer. The criteria would include the age of the business buildings and the need for revitalization. Within the parcel, any residential buildings would be excluded.

Snyder said this first study would cost $25,000. If a TIF district can be established, then there would be an additional estimated $10,000 for the writing of ordinances and the development of a specific plan.

The first problem is: Where will the money come from for the initial study? The city is cash-strapped in its budget, as it has been for the last several years. Therefore drafting a check out of the general operating fund is not an option.

Snyder recounted what Myers had said last week that the city could front the money, then pay itself back from tax earnings once the TIF program was up and running.

He said there was also a possibility that a professional developer would want to pay the initial $25,000; then that party would be paid back through the tax revenues.

Then, there is a third option, to collapse the revolving loan program and use that money to pay for the study.

The revolving loan program is an old program that was implemented years ago by the Illinois Department of Commerce and Economic Opportunity. It began with a specific grant amount that cities could lend out to local businesses specifically for economic development. The cities were allowed to charge a discounted interest rate and make money from the loan program, which in turn was supposed to be invested in new loans or other economic development projects.

Snyder said the city currently has $250,000 in the revolving loan fund. The catch is they cannot take just the $25,000 out. If they are going to use it, they have to designate all the funds for economic development projects.

Snyder said the city would have to find purposes for the entire amount. He offered a couple of suggestions, such as spending a portion of the money to underwrite a study on redevelopment of the former Lincoln Developmental Center campus.

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He said he had also talked to Mike Maniscalco of the Lincoln & Logan County Development Partnership about this. Maniscalco has told Snyder of a program he would like to start in Logan County for young entrepreneurs. The development partnership would solicit proposals from young entrepreneurs, take those to local businesses in Logan County and see if they would underwrite some of the costs.

Snyder said in that program, "a great idea might be underwriting the city Internet for a year for a company or helping with rent for a year or something like that."

Snyder said the downside is once the money is used, it's gone. He explained that it was originally intended to be loaned out, but there was a stipulation that one new job had to be created for every $15,000 loaned out. He said it was pretty hard to pay a new employee with $15,000, which may be why the loan program hasn't gotten any interest in quite some time.

Alderman David Wilmert asked if there was a specific time frame when decisions had to be made. Snyder said there was not, but the sooner the city gets started, the sooner they'll have a program in place.

Chuck Conzo, city treasurer, commented on the revolving loan money, saying there were circumstances when the money, which must be for economic improvement, could be used for infrastructure improvements.

Tracy Jackson of the street and alley department then wondered if one thing the loan money could be used for was to pay for the redevelopment of the parking along Sangamon Avenue.

Conzo said it could, and that had been discussed earlier. The problem had been the amount of paperwork the owners of the Blue Dog Inn would have to do to get the funds released.

However, it was noted this is now a different situation. If the city collapses the fund and earmarks a portion of it for development of the parking area, that would no longer have any connection with the Blue Dog.

Alderman Tom O'Donohue asked what was involved in collapsing the fund. Conzo said it would involve a lot of paperwork that would have to be prepared according to DCEO guidelines. Then the plans for the money would have to be submitted to DCEO, which would have to approve all of it and then give permission for the city to take the money and close the revolving loan program.

Alderman Jeff Hoinacki asked what would happen if the city created a TIF district and no one used it. Would there be costs involved in maintaining the TIF that would end up being city expense because there was no TIF revenue?

City attorney Bill Bates said there would be ongoing costs involved in administering the program. He said there would be record maintenance and a TIF administrator.

Snyder said those would be expenses that came out of TIF revenues. But Hoinacki said that was his point: if there is TIF money. If not, the city would still have to foot those bills.

Hoinacki also summarized what he saw as the next step: "It sounds like we need to make out a wish list."

The list he was referring to would be one that expends the full $250,000 in the revolving loan program.

Also in attendance at the Tuesday night meeting was local business owner David Lanterman. From the gallery he offered a suggestion for the wish list.

As the city works with the revitalization money they have received, they will develop plans for downtown enhancement grants. Those grants come with a local match requirement. Lanterman suggested they earmark a portion of the $250,000 as match for grants.

Snyder said that was a good idea. There is a grant application opportunity coming up where the local match is 20 percent. He said the city could earmark $100,000 for match money, and that would cover a $500,000 grant.

At the end of the discussion, it was agreed that aldermen would give thought to what economic development projects the city could spend the revolving loan money on, and the topic would be discussed again in the future.


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