[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.
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.
