Evanston consultant finds two TIF-eligible areas

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The Evanston Plaza shopping center at Dempster Street and Dodge Avenue is believed to fit the criteria for a Tax Increment Financing district. The City is eyeing the center and an area at Chicago and Main Street for the 7th and 8th TIF districts. | Joel L

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Updated: March 3, 2012 8:08AM

The city of Evanston is laying the groundwork to create two new Tax Increment Financing districts to spur revitalization of the beleaguered Evanston Plaza shopping center and an area around Main Street and Chicago Avenue.

Robert Rychlicki, the city’s longtime consultant on Tax Increment Financing, has concluded that both the shopping center, located at Dempster Street and Dodge Avenue, and an area near the Main Street transit lines qualify under the criteria set forth in state statute. The requirements include a condition that the economic development would not take place “but for” the incentives.

Under a schedule outlined Wednesday at the Evanston City Council’s Economic Development Committee, the multi-step process to create the city’s seventh and eighth TIF districts could be completed as early as mid-July.

TIF districts allow the city to plow all additional tax revenue generated by the development back into the target area. Property values are effectively frozen at current levels for 23 years, when calculating the taxes paid to the schools and other governments. As values increase, either because of new development or appreciation, the additional taxes — that is, the “increment” — can be used to pay for infrastructure improvements, development incentives and other project-related costs.

City assistance

City officials hope to assist the new owners of Evanston Plaza in turning around the center, which has suffered from high vacancy rates.

The shopping center was purchased in mid-December for $8.1 million by Bonnie Investments, an asset recovery firm. Bank of America, the mortgage holder on the property, took possession last summer at a foreclosure auction.

The TIF proposed for an area near Main Street and Chicago Avenue would allow assistance for an office project on the southeast corner, and address infrastructure and other needs in the Main Street transit and shopping district west of Chicago Avenue.

May redraw
borders

The city also is considering redrawing the boundaries of a downtown TIF district for the last seven years of its term. Staff told the Economic Development Committee Wednesday that extending the Washington National TIF along the south side of Davis Street between Benson and Oak avenues would allow the city to apply surplus money toward needed improvements. The Washington National TIF district was created in 1995 and later revised to finance construction of the Sherman Plaza parking garage.

While the TIF is paying down the garage debt at a rate of about $3.5 million a year, the fund has a $5 million surplus that could grow to $15 million or more by the time the district expires in 2018, Assistant City Manager Martin Lyons told the committee.

On Wednesday, city staff again recommended the city close out the successful Howard Street district that created a successful shopping center that includes Target, a Jewel-Osco store and a Best Buy. The city would declare a $1.3 million surplus in the account, and the county would distribute the funds to the schools, city and other taxing entities according to their respective share of the tax bill.

Boon to the schools

The elementary school system, District 65, stands to gain the most, about $501,800, from the surplus. Evanston Township High School District 202 would reap about $338,000, while the city of Evanston would receive about $252,200. The remainder would go to the county, Oakton Community College and other taxing districts.

The early closing also would boost the amount of revenue that schools and other governments receive from the shopping center on a regular basis. For instance, School District 65‘s share, now about $169,000 a year, is projected to jump to $605,000.

Council members held off action to terminate the district in December because several aldermen contended that School District 65 should assume the cost of school crossing guards, a $372,000 annual expense that now comes out of the city’s general fund.

“District 65 has respectfully declined assumption of the school crossing guard program,” Lyons reported to the committee. The district, through its chief financial officer Mary Brown, reaffirmed its long-standing position that the district’s responsibility for student safety is restricted to school property. Moreover, the district does not wish to pick up the ongoing cost of school crossing guards, based on a one-time distribution of surplus revenue.

Alderman Ann Rainey, whose 8th Ward includes the Howard-Hartrey Shopping Center, is not convinced the city should close the TIF early.

“Not one cent has ever been spent on improving the surrounding area of the shopping center. That shopping center is the ugliest, dirtiest mess, but the most profitable in the city,” said Rainey. “You keep talking about closing this TIF, and I keep talking about doing things.”

Rainey would like some funds spent on paving and landscaping around a wall that was constructed as a buffer between the center and nearby homes.

City Manager Wally Bobkiewicz said those projects would not interfere with plans to close out the district. That action will be put off until April or May, however, because school officials want to include their share of the surplus in their 2012-13 budgets.