TIF Information
January 12, 2010
Central School Board to Fight TIF
At its regular December meeting the Central School District # 104 Board of Education passed Resolution 12-08 regarding the proposed Regency Park Tax Increment Financing District, commonly known as a TIF. The resolution authorizes the school’s Attorney Kurt Schroeder to file a law suit to prevent the implementation of the Regency Park TIF. A copy of the resolution is included in the newsletter.
What Is a TIF?
TIFs were first implemented in St. Clair County in the 1980’s. TIFs were intended as a way to redevelop cities with blighted older neighborhoods, deteriorating business and industrial areas. The intention was to help needy areas in cities like Granite City, East St. Louis, and Belleville.
How Does a TIF Work?
Basically a City creates a Tax Increment Financing District by setting the boundaries of the district and approving a Tax Increment Financing Plan to collect the property taxes resulting from new development in the TIF District, and then use the property taxes to reimburse other entities such as the owners of the project for their eligible cost in developing the project. The taxes may be collected for up to 23 years. The eligible cost must be listed in the TIF Plan, and those costs are included in the newsletter.
What Is the BUT-FOR TEST?
The BUT-FOR Test is one of most important requirements of any TIF. A public body, in this case the City of O’Fallon, must prove that the land making up the TIF district is truly blighted. The land is supposed to be so blighted that but for the help of the Tax Increment Financing District it would not have a chance of being developed, thus the name, “BUT-FOR” test.
Legal Basis of a Challenge
The City of O’Fallon’s documents clearly support that the Regency Park TIF does not pass the “BUT-FOR” Test. The documents state that the land in the TIF district would be developed at a $22,000,000 dollar level without a TIF. This gives the district a very strong legal basis to challenge the TIF in court.
The Decision to Fight the TIF
Having a strong legal basis for a court challenge was not the deciding factor in the board’s decision to fight the Regency Park TIF. The board actually agrees with some of the goals of the TIF. For example, the board agrees with the City of O’Fallon that Job Growth Is an Important Goal. However, after the board’s investigation into the context and details of the Regency Park TIF, the board concluded that the Regency Park TIF is not a good deal for job growth, for the tax payers of O’Fallon, or for the tax payers of Central School District # 104.
Is Job Growth Possible without TIF Dollars?
This fall the GreenMont Corporate Center, a three story office building at the corner of Regency Park Drive and Green Mount Road, was completed across the street from the proposed Regency Park TIF District. Balke Brown Associates built GreenMont Corporate Center without TIF dollars. This new office building is attracting tenants who are bringing jobs to O’Fallon. Additionally, the Balke Brown Building will generate substantial property tax dollars in the next twenty three years.
Mine Subsidence
The Regency Park TIF justifies the need for the TIF by noting that the property is undermined. However, mine subsidence accounts for only 15.5% of the property tax dollars given to the developers! The other 84.5 % of the property tax dollars allocated reimburse the developer for a wide range of costs i.e. 17% or $8,900,000 is for property acquisition (This will be used to reimburse the developer for the 66 acres of land they purchased for the project.) Further, Balke Brown Associates addressed the risk of mine subsidence at the GreenMont Corporate Center without TIF dollars. When asked to limit the TIF to the cost for mine subsidence, the developers and the city refused to remove anything from the list of reimbursable expenses.
What impact will the TIF have on other developments?
Central School District # 104 believes that if the Regency Park TIF goes forward in its current form it will kill at least one major office building already approved by O’Fallon Planning and Zoning. Additionally, future developments will demand a TIF. Further, it will place firms who have already invested with in the district’s and city’s boundaries at a disadvantage and force them to seek relief as they try to level the property tax playing field.
Corporate Campus
The developers and the City of O’Fallon put forth the idea that the TIF is necessary to bring a first class “Corporate Campus” to O’Fallon. Yet they have refused to place any safeguards into the TIF Plan to assure that $51,499,873 in property taxes going into the TIF will result in a corporate campus. The developers and City Officials admit that the project could be broken up into smaller lots and sold. They further admit that nothing in the TIF plan requires the developer to build a first class corporate campus or to develop it at any particular dollar level.
The TIF would affect every tax payer in Central School District # 104.
According to the City of O’Fallon’s TIF proposal, the City of O’Fallon could collect up to $51,499,873 in Property Tax Dollars during the twenty-three year TIF period. Of the $51,499,873 of property taxes the City of O’Fallon would collect, Central School District # 104 would normally get $21,835,946. How does that sum of money relate to Central School District # 104’s budget and expenditures? That is enough to pay off the debt on the Joseph Arthur Middle School, add a new wing of classrooms, a new gym, and still have five or six million dollars left. The $21,835,946 is enough to run the school district for four years and seven months without one dollar in property taxes!
Central School District #104
December 8, 2008
RESOLUTION 12-08
Concerning the Regency Park Tax Increment Financing District O’Fallon, Illinois.
WHEREAS, the Regency Park Tax Increment Financing District (the “TIF”) is projected to generate in excess of $50 million in new property taxes over a 23 year period, and up to 87.5% of said new taxes will be distributed to the developer entity which is comprised of Darwin Miles as to a 25% interest, Darrell Shelton as to a 25% interest, and unknown investors as to a 50% interest, for redevelopment project costs as listed in Exhibit D attached hereto; and
WHEREAS, the Projected Impact on Central School District #104 spreadsheets prepared by PGAVURBANCONSULTING in conjunction with the Redevelopment Plan and Project document that the proposed Regency Park TIF area will develop at a $22 million level without the adoption of the TIF and the diversion of property tax dollars from the school district to the developer; and
WHEREAS, a substantial office development has already been completed adjacent to the Regency Park TIF Area without the use of tax increment financing, and another proposed development has been submitted to O’Fallon Planning and Zoning; and
WHEREAS, the Redevelopment Plan and Project prepared by PGAVURBANCONSULTING does not support the finding therein that the Regency Park TIF Area is a “blighted area” as said term is applied to vacant land, since the subject area is not “vacant land” as defined in 65 ILCS 5/11-74.4-3(v); and
WHEREAS, there are no checks or balances in the Regency Park TIF to ensure that the project will be built beyond a $22 million level; and
WHEREAS, the Regency Park TIF sets a precedent for future TIF’s throughout the boundaries of Central School District # 104; and
WHEREAS, the Regency Park TIF will increase the property tax burden for existing residential and commercial properties.
BE IT THEREFORE RESOLVED, that the Central School District #104Board of Education shall take whatever legal means it has at its disposal to stop the implementation of the Regency Park Tax Increment Financing District, including but not limited to the filing of a lawsuit.
MOTION: ___________ SECOND: __________
Roll Call Ayes:
Roll Call Nays:
MOTION PASSED __ to __
Gary Seneczyn,
President Central District #104 Board of Education
ATTEST:
Jane Hamm Secretary, Central District #104 Board of Education
Exhibit D
ESTIMATED REDEVELOPMENT PROJECT COSTS
TIF Redevelopment Plan & Project
Regency Park Redevelopment Project Area O’Fallon, Illinois
| Description | Estimated Cost | |
| A. Public Works or Improvements (Construction of streets, curb and gutters, utilities, drainage control measures, culverts, structures, and other public improvements) | $9,000,000 | |
| B. Property Assembly Costs | $27,900,000 | |
| 1. Property acquisition | $8,900,000 | |
| 2. Stormwater management & landscaping | $3,000,000 | |
| 3. Site & building related earthwork & utilities | $5,000,000 | |
| 4. Pavements | $3,000,000 | |
| 5. Mine reclamation | $8,000,000 | |
| C. Building Rehabilitation & Retrofitting Cost | $1,200,000 | |
| D. Taxing District Capital Costs | $500,000 | |
| E. Job Training | $500,000 | |
|
F. Interest Costs Incurred by Developers (Not to exceed 30% of annual interest costs) |
$8,500,000 | |
| G. Relocation Costs | $500,000 | |
| H. Planning, Legal & Professional Services | $2,000,000 | |
| I. General Administration | $100,000 | |
| J. Financing Costs | see note 3 | |
| K. Contingency | $5,000,000 | |
| Total Estimated Project Costs | $55,200,000 | |
|
Estimated Surplus Declaration (For Distribution to Taxing Districts) |
$3,700,000 | |
| Total Estimated Use of TIF Funds | $58,900,000 |
Notes:
1. All amounts expressed in 2008 dollars.
2. Adjustments may be made among line items within the budget to reflect program implementation experience.
3. Total estimated redevelopment project costs exclude any financing costs such as interest expense, capitalized interest and cost of issuance of obligations by the City. These costs are subject to prevailing market conditions and will be considered part of the total redevelopment project cost if and when such financing costs are incurred.
4. Private redevelopment costs and investment are in addition to the above.
5. The total estimated redevelopment project costs shall not be increased by more that 5% after adjustment for inflation from the date of the Plan adoption per statutory requirements.
8/14/2008 PGAVURBANConsulting
