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 History of the Rehabilitation TIF in the city of Lincoln
In 2012, aldermen began considering the creation of a Rehabilitation
TIF (Tax Increment Financing) District for the downtown area in
Lincoln. The first step was to conduct a study of the downtown area
business buildings. The council contracted Lisa Kramer of Prairie
Engineers and John Myers of Rabin & Myers in Springfield. When that
portion of the work was completed, the consultants came back to the
city with a map (see
map) of what could be designated as the Rehabilitation TIF
District.
It should also be noted that these grants are not available for
residential properties. The TIF District covers all of the downtown
area and portions of the city that are both residential and
business. Only the business properties in those mixed areas are
eligible for TIF funding.
Moving forward, the district was created, and a TIF application was
designed that defined a Rehabilitation TIF project. Inside that
definition the work that could be funded under the TIF included
façade and interior improvements to existing business buildings
inside the district. The general idea was to save downtown buildings
if at all possible. If the buildings were still structurally sound
but needed upgrades to the interior to make the building more
user-friendly for business owners or patrons, then TIF could be
used. If the fronts of the buildings were in need of repair, TIF
funds could be used. The condition of the Rehabilitation TIF was
that the buildings needed to be maintained as they would have looked
when they were built. This condition fell in line with the work that
would be done by the Historical Preservation Commission which would
come a year later in 2013.
 The TIF also allowed for new construction, but with certain criteria
concerning the design of the structure. The TIF guidelines said,
“Staff will evaluate the esthetic nature of the building and
determine if the Central Business District Design Guidelines,
Downtown Guidelines, and Historic Preservation guidelines, if
applicable, are being met.”
In 2014 MMIL Properties, Inc., a company of investors that included
local businessman David Lanterman, filed the first TIF application.
The firm was seeking TIF dollars for the construction of a new
theater, the Lincoln Grand 8 Theater, to be located at the corner of
S. Kickapoo and Clinton Streets. The request from MMIL was for
$2,000,000, money the city did not have. In order to accommodate the
request, the city issued an Alternate Revenue Bond in the amount of
$2,258,000 with the extra money earmarked for city sidewalk work
that would be needed after the building project was completed.
According to the ordinance passed August 18, 2014 (ordinance
# 2014-818), the bond was to be repaid over a span of 20 years,
with the first payment of $90,000 due in December of 2016. (See
payment schedule - ordinance # 2014-818, page 10)
The benefits of TIF funded projects
There are a number of benefits to implementing a TIF district and
funding program.
For residents, the program offers a quality of life type benefit. By
building up and/or preserving the downtown business district, the
city of Lincoln can offer its constituents alternatives to the big
box style of shopping. The downtown area remains alive and
functioning, something that many Midwest towns struggle to
accomplish, and it creates among other things, greater choices in
local shopping and entertainment. It also increases employment
opportunities through the development of new or expanded businesses.
For the building or business owner, it is free money, literally.
While there are terms and conditions regarding what work can be done
on a structure, the property owners who meet the criteria will be
given dollars to partially finance their projects with zero
expectation of ever having to give that money back to the city.
For the city of Lincoln, the TIF offers an additional source of
revenue that does not increase taxes to its constituents.
When a project is completed, the property tax on that property will
increase. Under the TIF rules, the city can claim the difference
between the old tax assessment before the improvements were made,
and the new tax assessment after the improvements for a total of 20
years.
In the case of the theater, that difference is quite large. When the
Lincoln City Council approved the issuance of an Alternate Revenue
Bond in 2014, Mayor Keith Snyder said that the increased property
tax on the theater after its completion would go up substantially.
Because the TIF program allows the city to capture all the tax
increase on a developed or rehabilitated property, the city was
going to be able to claim approximately $150,000 to $175,000 a year
from the theater over the next 20 years. (Ordinance
2014-818, page 32). The tax increase would then give the city
enough to pay back the bond, plus earn a profit. That profit could
then be rolled back into new TIF projects, or because it may be
considered unrestricted cash, could be used to support other city of
Lincoln projects.
Fast forward to 2015; city receives a new request for TIF monies
In February of 2015, MMIL Properties filed a new TIF application for
a new property located at 515 Broadway Street. In the application,
they stated that the building was going to be repurposed into office
space for a new lease, Edward Jones. The lease agreement was already
in place, and the work would include redefining the former, then
vacant, storefront into an office. The building had at some point in
the past had the façade, or store front, redesigned. In that
redesign, the building lost its historical integrity, no longer
resembling the structure as it was originally designed. MMIL had a
goal of re-creating the original façade and stated on their
application the total cost of that alone would come to approximately
$24,000. The TIF application specifies that an applicant may request
50 to 75 percent of the total project cost. MMIL asked for the 75
percent or $18,000.
The application was filed with the TIF committee, a special group of
people appointed by the city of Lincoln to study the application,
compare it to the established guidelines and determine if the
application meets the criteria of the Rehabilitation TIF program.
The members of that committee are Andi Hake of the Logan County
Alliance, April Doolin of the Lincoln Historic Preservation
Commission, Rick Zimmer of the Lincoln Zoning Board of Appeals, City
of Lincoln Building and Safety Officer John Lebegue, and Lincoln
city administrator, Clay Johnson.
 On March 18 that committee determined that the application was
appropriate and forwarded it on to the Lincoln City Council with a
recommendation to approve. It was first presented by Johnson to the
city council on March 24th at their Tuesday night Committee of the
Whole meeting. City ponders how to finance the TIF request
When the request came before the city council, the membership
indicated through their discussion that they were in favor of
assisting MMIL with dollars for the façade improvement. However, the
question soon became where would the money for the request come
from?
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The first consideration was that there was still money in the TIF
fund to grant the request, however, further investigation revealed
that the dollars in the fund were already earmarked for the sidewalk
improvements to be done in front of the new theater. Therefore, the
city would have to come up with the money from some other source.
Because the end of the city’s fiscal year was nearing, and the
budget building process for the new fiscal year was fast
approaching, the council tabled a vote on April 6th regarding the
TIF request. Aldermen agreed that they wanted to hold off on
granting the request until they had reviewed and established a
budget for the coming year, and determined if and from where dollars
could be taken to give to the TIF project.
During the budget workshops held in April, the Council identified
areas where dollars could be reduced, and money transferred to
support future TIF applications. They decided on a total of $50,000
for the 2015-16 fiscal year that could be given out to various
approved applications.
City considers, are the financial parameters of the TIF
appropriate?
During the process of finding the money, the council also looked at
how far that money would go. With the TIF application specifying it
would cover an amount between 50 and 75 percent of the total project
cost, aldermen realized that they could be faced with an application
for example for $100,000 with a 50 percent request ($50,000 from TIF),
and they would not have the money after the MMIL request to cover
it.
The council felt that they wanted in some way to lower the amount
that could be awarded, so as to spread the dollars across more
projects. While they understood that they had the ability to change
the current parameters of the TIF application, what they ended up
with was a new program specifically for Façade Grants.
How is a façade grant different from a TIF grant?
In the original TIF application there are project categories: 1) New
business construction; 2) Business
Relocation/Expansion/Rehabilitation; 3) Façade Restoration Grant of
Loan; 4) Emergency Structural Repairs; and 5) ADA, Life Safety,
Building Code, and Electrical Rehabilitation.
What the council is doing, is simply separating option number three
and making it a standalone application with the same benefits to the
property owner (free money) and the City (the ability to capture
increased property taxes). But it will lower the dollar amount of
the grant to accommodate smaller projects, and to allow the city to
issue funding without going into new debt for those smaller
projects.
In the case of the application for the Broadway Street building, it
is estimated that the property tax will double with the project
completed. The tax assessment will be based upon the work done
outside on the façade as well as the work done inside the building.
The current tax assessment on the building is $1,258. With the
completion of the renovation, the property tax is expected to go to
approximately $2,500. Keeping in round numbers, the city would be
able to claim the difference of approximately $1,250 per year for
the next 20 years. This would earn the city a total of $25,000.
In the case of the Broadway Street project, the aldermen have agreed
that they want to support the project with a façade grant award of
$10,000, but they have not yet voted to do so. The request remained
tabled at the May 18th voting session because the Council has not
passed a new document that pertains only to façade grants.
Aldermen consider how to move forward
In a number of conversations with city administrator Johnson, this
week, he brought to light what the council wants in that new
document. The exact wording of the document is up for discussion,
and Johnson will be given greater direction on how to compose the
document as the council comes to their decisions.
Thus far, what they have concluded is that they want to distribute
the money in smaller increments. They are not necessarily in favor
of basing the award on a percentage of the total project cost. They
do want to cap the amount they are willing to give out for any one
application, They also want to put some kind of 'minimum' on the
total project cost, so they aren't investing in low return projects.
At this point, Johnson said the document will have a maximum of
$10,000. It will be a matching grant. In other words, the city will
not finance 100 percent of any project. And there will be a minimum
amount that they will award. Johnson spoke about what he sees as the
possible language, “The funding portion of the program may look
something like: An eligible façade grant request may be reimbursed
at 50% of the cost of the rehabilitation, in an amount greater than
‘X’ and not to exceed $10,000.”
 The council still has work to do in the language. To date nothing is
concrete, but they are getting closer to developing what they feel
is a fair, and relatively cut and dried method for local building
and business owners within the TIF District to acquire funding
through the city of Lincoln for façade improvements.
Looking ahead
Once the document is nailed down, the city council wants to
encourage any eligible business or business property owner in the
downtown TIF District (see
map) to consider becoming a part of the program. The program has
the potential to benefit many people as defined earlier in this
article.
To date, Johnson has indicated that there are at least a couple of
property owners within the district that have an interest in taking
advantage of the grants, but no new applications have been filed.
It is also expected that the Council will in the future, grant MMIL
$10,000 according to the guidelines outlined in the separate Façade
Grant document.
[Nila Smith]
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