Tuesday, Oct. 21


City approves intent to issue $665,000 in bonds
for business development

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[OCT. 21, 2003]  The ball is rolling on a proposed new business development at the old Stage and Staples store location. The developer, Diversified Acquisition LLC, has asked the city to partner with them in redeveloping the former Staples and Stage building. They would like to bring a Goody's and a Dollar Tree to occupy the building. City Attorney Bill Bates updated the council on newest requests and revised proposal details.

Bates said he had a couple of communications this week with the developer's lawyer, James Grice. A newer proposal, with new tables and figures, that corrects some misinformation and supplies additional information was given to council members at Monday evening's meeting. [See previous articles in LDN: Oct. 15, Oct. 18.]

The stores have revised their revenue projections. The original retail sales projections were for a combined total of $5.8 million. The stores are now saying they expect to generate $6.2 million in retail sales their first year here in Lincoln.

The new calculations project an approximate potential of $93,200 in sales tax revenue for Lincoln:

--$62,175 at 1 percent available for general purposes

--$31,000 at 0.5 percent available with the new infrastructure tax that kicks in at the start of the year, although those proceeds have a four-month delay before they are received. As an example, January sales tax revenue is not received until April.

The developers are still saying that the financial layout by the city will be paid off by the sales tax revenues generated by the new stores in just 10 years. They also suggest that there will be additional benefits and sales tax revenue generated by other businesses that will follow those stores coming in and by the increased property values with the development of a new business district.

In trying to move things along, the developer has requested that a public hearing be set for Monday, Nov. 10. It is the developer's experience that if you establish a business district or development district, it will help secure certain types of funding for the project and the funding is easier to get. You have to have a public hearing before you can declare something a "Development District."

Two things will be discussed at the public hearing. First is the public's response to developing a business district in that area. The property that is being discussed is 4.5 acres.

Second is to solicit public opinion about the redevelopment plan.

The council was also asked to schedule Nov. 17 to declare the property as a Development District and approve a Development Plan.

At last night's meeting the council passed an ordinance of intent to issue $665,000 in alternate bonds to back the project. Agreeing to this, Bates said, is agreeing to an intent to go forward. It is not a commitment to do the project or actually take out the bonds. "It starts the process," he said. This will allow funds to be available by January when they are needed.

A public notice will be posted, and then there will be the standard 30-day petition period.


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To get the bonds issued, the city must pledge funds to back the bonds, and in this case it is our current sales tax revenue that will be used. The bond pledges are based on all of the city's current sales tax revenue. It does not include the revenue that will be generated by the new businesses. The bond agreement reads, "If the sales tax revenues for the city of Lincoln are sufficient to cover this bond issue, there will be no tax levy to pay. If the sales tax revenues are not sufficient to pay this bond issue, we will levy taxes to pay this bond."

Based on current income, "The sales tax revenue of Lincoln will be sufficient to pay this," Bates said.

The question that remains is whether the sales tax revenue of the new businesses will be enough for Lincoln to pay off the bonds in 10 years. However, it is Lincoln's current revenues that will be put up against the bonds since you cannot pledge the sales tax revenues from new businesses that do not yet exist, Bates said.

Bates said that at this juncture the city is indebted to no one, including the company the city normally does their financing with, First MidState of Bloomington, nor the bond company that the developer uses, Cutler and Chapman of Chicago.

One other undetermined element to the finances is that these will probably be taxable bonds, though that is not certain yet, Bates said.

There is still some question about whether the signal light requested by the businesses will be approved by the Illinois Department of Transportation. IDOT has a list of eight warrants in evaluating placement of traffic lights, Mark Mathon said. The council is favorable toward the signal if IDOT will allow it.

In the event IDOT does approve the signal device, it is possible that the cost will be covered by grants or the 0.5 percent sales tax revenue designated for infrastructure. That cost could then be deducted from the $665,000.

A lot of questions remain to be asked and answered in this project, but city representatives have been working hard at this project and it continues to hold strong potential toward becoming a reality.

[Jan Youngquist]


Note pertaining to public hearing day: The council normally meets on the first and third Monday and the second and fourth Tuesday each month. Work sessions are normally on Tuesday, but that Tuesday falls on Veterans Day. The council agreed and the public is invited to meet in the chambers at 7:15 p.m. Monday, Nov. 10.

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