Proposed Dempster/Waukegan Redevelopment Area Q&A

Public Hearing – April 30, 2012
Questions and Responses

The following questions and responses are provided to summarize the few comments made from the three members of the public that spoke at the April 30 Public Hearing regarding the proposed Dempster-Waukegan TIF (Tax Increment Finance) Area. Questions are provided in regular font, while answers are provided in bold, italicized font. Unless otherwise noted, “shopping center” refers to the Prairie View Shopping center, which is at the southeast corner of Dempster Street and Waukegan Road. While this is the primary land use in the proposed Redevelopment Area, other key parcels are included in the proposed boundaries of the Redevelopment Area. Unless otherwise noted “Redevelopment Area” refers to the entire proposed Dempster/Waukegan Redevelopment Area.

1) Concern with impact on School District 67.
District 67 will continue to receive its annual levy from all properties in the TIF; the TIF does NOT reduce 67’s property tax revenues or limit their ability to tax existing properties. In fact, setting up a TIF is more likely to stabilize property tax rates in the district, thereby helping the school district stabilize its own revenues. This is especially important because property tax revenue from properties in the proposed TIF area has shrunk annually for the last several years (due to decreasing property values) at a faster rate than the rest of the Village. Under the current Cook County tax assessment process, when commercial properties pay less tax, the residential parcels are forced to pay more to cover the shortage. Further, the Village is working closely with District 67 (as it has in the past) on a revenue-sharing agreement to provide financial assistance to the District. Lastly, the TIF Area will not include new residential development, so the student population will not be impacted by this area.

2) What were the positive aspects of the existing Waukegan Road TIF?
The Waukegan Road TIF provided a method to remove hotel properties that were a significant source of criminal activity and had a negative impact on nearby homes and Golf Middle School. These properties were replaced with retail and commercial stores that provide property and sales tax revenues to the community, as well as reversed declining property values in the nearby areas.

Due to the Waukegan Road TIF, a revenue sharing agreement with District 67 was enacted by the Village in 1995 to address perceived financial aspects of the Waukegan Road TIF. Because of this agreement, District 67 received a payment of $173,720 in 2011 alone, has received more than $1,340,000 since the agreement began and will receive an additional $1,670,000 over the next seven years. This additional revenue would not have been available had the TIF not been in place.

3) Why is Tax Increment Financing (TIF) needed to help rebuild the Prairie View Shopping Center? Why can’t the developer assume the risk?
The Prairie View property owners approached the Village requesting TIF assistance because they desire to completely redevelop the center and cannot do so without this assistance. The extraordinary costs of redevelopment make this project economically impossible without a TIF program. Restrictive (but appropriate) stormwater regulations, grading problems and necessary asbestos removal otherwise make this redevelopment project cost-prohibitive.

There is no risk to the Village in creating the TIF Area. No Village funding is involved, as funds for improvements comes out of the TIF Area, and is subject to redevelopment agreements that the Village must approve.

4) What is being done to retain existing businesses within the TIF District?
Property owners (and the Village) cannot predict which stores and businesses will remain or locate in the TIF Area. For example, a redeveloped Prairie View center will provide opportunities for some existing businesses to stay in the center in new, improved spaces. Leases for businesses in Prairie View will be private decisions based on market demand and agreements between the property owner and existing and prospective tenants.


Community Workshop – January 30, 2012
Public Questions and Responses

The following questions and responses are provided as a summary of the community workshop meeting on January 30, 2012, to assist the public’s understanding of the proposed Dempster-Waukegan Redevelopment Area. Questions are provided in regular font, while answers are provided in bold, italicized font. Unless otherwise noted, “shopping center” refers to the Prairie View Shopping center, which is at the southeast corner of Dempster Street and Waukegan Road. While this is the primary land use in the proposed Redevelopment Area, other key parcels are included in the proposed boundaries of the Redevelopment Area. Unless otherwise noted “Redevelopment Area” refers to the entire proposed Dempster/Waukegan Redevelopment Area.

1) Why is Tax Increment Financing (TIF) needed to help rebuild the Prairie View Shopping Center?
The Prairie View property owners approached the Village requesting TIF assistance because they desire to completely redevelop the center and cannot do so without this assistance. The extraordinary costs of redevelopment make this project economically impossible without a TIF program. Restrictive (but appropriate) stormwater regulations, grading problems and necessary asbestos removal otherwise make this redevelopment project cost-prohibitive.

2) What is TIF? How does it work?
TIF is an economic development tool used by villages and cities that uses increases in future property tax revenue for eligible redevelopment project costs within a specific area TIF is NOT an additional tax, and it does NOT change the process of how property is assessed. TIF sets a base property value at a certain amount, usually for a 23 year period, within a specific geographic area. This value serves as a constant property tax base for all government taxing bodies [including villages, schools, and park districts) Any increase in tax revenues (from new development, improvements, or growth in value of existing property during the 23 year period (the “increment”)] is placed in a special TIF fund to pay for improvements within the TIF area. The improvements are required to provide a public benefit. Further information concerning TIF’s is available at www.illinois-tif.com and on the Village website www.mortongroveil.org.

 

3) How is the new development in the shopping center going to impact existing uses and businesses within the center?
Property owners (and the Village) cannot predict which stores and businesses will locate in the redeveloped shopping center and surrounding areas. A redeveloped Prairie View center will provide opportunities for some existing businesses to stay in the center in new, improved spaces. Leases for businesses in Prairie View will be private decisions based on market demand and agreements between the property owner and existing and prospective tenants.

4) Can the look and appeal of the shopping center be designed to provide an inviting shopping environment?
The design of the shopping center is determined by the private property owners. The owners will design the center to support the commercial activity the center and the area are intended for. The Village reviews proposed plans using local regulations. While the Village may suggest preferences for certain design esthetics, we can only ensure that the project adhere to ordinances.

5) Is there a plan to redevelop other parcels outside Prairie View?
At this time, no other property owners or developers within the proposed Redevelopment Area have informed the Village of any such plans. The TIF designation allows the ability to provide development assistance for parcels within the proposed TIF boundaries where a public benefit will result.

6) What is the impact on School District 67?
District 67’s revenue from the properties in the Redevelopment Area has shrunk annually for the last several years due to decreasing property values and the resulting decline in property tax revenues. Creation of a TIF district in this area will help stabilize property values and will provide a tool to encourage new investment in the area, to help prevent further decreases. The Village will work with District 67 (as it has in the past) on a revenue-sharing agreement that will provide financial assistance to the District. Further, the Redevelopment Area will not include new residential development, so the student population will not be impacted by this area.

In 1997, a revenue sharing agreement with District 67 was enacted by the Village due to concerns about the financial impact of the Waukegan Road TIF. Because of this agreement, District 67 received $173,720 in 2011 alone, and has received more than $1,300,000 since the agreement began. This additional revenue would not have been available had the TIF not been in place.

7) Can the site layout be changed or designed to reflect the adjacent Forest Preserve?
While the Prairie View site plan shown at the January 30 meeting was only a concept, the design of the shopping center will be determined by the private property owners to attract the commercial activity needed to support the center. The center will be subject to Village zoning and development requirements. The center will include significant improvements to stormwater management and control to significantly reduce the free-flowing drainage that now enters the Forest Preserve from the shopping center. This will significantly reduce run-off, potential pollutants, and resulting erosion from the shopping center’s runoff.

8) What are the steps and approval process required (to designate the Redevelopment Area for Tax Increment Financing)?
To create a TIF District, the Village is required to follow specific steps required by State Law. This includes filing a Redevelopment Plan, holding a JRB (Joint Review Board consisting of all affected taxing districts) meeting, holding a TIF public hearing, and Village Board meetings to approve the Redevelopment Plan. These public meeting opportunities are provided in addition to the meetings already held where the proposed Dempster-Waukegan TIF was discussed.

9) Is there any relationship between the proposed Redevelopment Area and the nearby Waukegan Road and Lehigh-Ferris TIF Districts?
The proposed Dempster/Waukegan Redevelopment Area is adjacent to both other TIF Districts (across Forest Preserve from Lehigh-Ferris). The new Redevelopment Area has been designed to accommodate redevelopment opportunities for the most important commercial intersection in all of Morton Grove. This location happens to be adjacent to both other TIF Districts, and it is intended to continue the successes these districts have already had.

10) What is the amount of money to be spent for this project?
According to the property owner, redevelopment of the Prairie View shopping center will likely be in the range of $55 million of private investment.

11) What background information is available concerning the Prairie View shopping center owners? Did they obtain TIF in other projects they own?
Prairie View is owned by a family-owned company, Federal Construction, based in Montreal, Canada. They own some commercial properties in Illinois (Morton Grove, Elmhurst and North Riverside), Florida and Michigan, as well as residential and commercial properties in Canada.

In Elmhurst, Federal redeveloped a shopping center utilizing TIF as approved by the City of Elmhurst. The shopping center, now called Elmhurst Crossing, is located at the northeast corner of Route 83 and St. Charles Road, and is widely known as a very successful retail redevelopment. The Elmhurst center is fully occupied with prominent retail uses and significant shopper volumes.

12) Can landscaping and trees be incorporated into the plans for Prairie View?
The developer’s plans need to address Village requirements for landscaping for their redevelopment project. This includes landscaping in the interior parking lot area(s), as well as along the site’s perimeter.

13) Neighborhood property values have declined in the last several years, like Prairie View’s property values have. What about reducing the tax burden from residents that have seen these declines?
Prairie View’s proposed $55 million reinvestment is only possible if the TIF District can be created; this reinvestment will result in increased employment and enhanced sales tax revenues, which are public benefits that would result directly from this project and the TIF. The reinvestment can also be expected to cause an “echo” effect into surrounding areas, thereby benefitting them and allowing property values to increase. Overall, increases in local revenues and related public benefits due to this project translate to a reduced tax burden on individual homeowners.

It is also important to understand the property tax relationship between commercial and residential areas. When shopping centers pay less property taxes, residents pay more. In general, a new Prairie View Center with a lower vacancy rate will pay more in property taxes, which helps reduce the burden on residential taxpayers.

14) What will replace the Bally’s/LA Fitness amenities, such as the existing pool?
It is anticipated that this business will be present in the shopping center well into 2013, as their lease does not end until late 2013. Decisions concerning Bally’s/LA Fitness are private matters (no Village authority), and will be made by the property owner. Those interested in alternative local recreational facilities can utilize the Morton Grove Park District, and Planet Fitness in the Village Plaza at Dempster and Harlem.

15) Can a detailed financial statement be provided concerning the TIF’s impacts on the community?
The TIF Plan will include a maximum budget for TIF eligible expenses for the TIF’s 23-year life. Additionally, once negotiated and approved by the Village Board, a Redevelopment Agreement between Prairie View and the Village will document the Prairie View redevelopment financing deal and related financial benefits that accrue to the Village.

16) Can TIF funds be moved around (“ported”) between TIF Districts?
Transfers of TIF funds are allowed when TIF Districts are located adjacent to each other (as defined by the State TIF Act). The proposed Dempster/Waukegan TIF and the Lehigh-Ferris TIF Area are separated by less than 1 mile of forest preserve, therefore they qualify as contiguous. This allows for a firm financial foundation for a new TIF based on the success of an existing TIF, thereby reducing the financial burden on the rest of the community.

17) What is “Plan B” if no TIF District is created for this area?
The property owner clearly indicated that the Prairie View redevelopment cannot, and will not, occur without TIF in this location. Prospective retail store tenants will seek the certainty of a TIF in order to locate in the new center. Should the TIF not occur, the existing center can be expected to further decline, with discount retailers, second-hand stores, and related marginal commercial uses becoming more prevalent.

18) What about other vacant retail space in Morton Grove? Would this project just move tenants from elsewhere in the community?
The scale and size of the proposed Prairie View redevelopment is much larger than most existing retail space in the Village. Therefore, Prairie View’s redevelopment will provide a retail “product” that is not readily available in Morton Grove at this time. The large-scale retail spaces in the other large centers in Morton Grove (Village Plaza and Washington Commons) are fully occupied (as of February, 2012), with long-term leases.