PAXTON — Paxton’s tax-increment financing (TIF) district — spanning from west of the Interstate 57 interchange to the city’s downtown — has been financially underperforming in its six-plus years in existence, despite coming close to meeting expectations in terms of development, the city’s TIF consultant told aldermen last week.
With the exception of land around the I-57 interchange that was to be developed by Rantoul developer Joe Warner, the TIF district has been fairly successful in generating development, TIF consultant Dan Schuering said, pointing to recent improvements to numerous properties downtown and along Ottawa Road, including the construction of a hotel west of the interstate.
Despite such development, however, at least three factors have led to the TIF district underperforming financially since its inception in December 2012 — even with the development of the Warner land basically “written off” following his death in 2013, Schuering said.
Perhaps the most “serious” factor, Schuering said, is the improper reassessment of improved properties in the TIF district. Despite city officials having repeatedly asked the Ford County Supervisor of Assessments Office to reassess improved properties to reflect “appropriate” assessed values, some have had their values increased only marginally, Schuering said.
As a result, those properties are not generating as much tax increment as had been expected, and the TIF district subsequently has little revenue to use as an incentive for further development, let alone reimburse developers for improvements already made.
As just one example, Schuering said, the building at 102 S. Market St. downtown — which now occupies the Harvest Ale House — had $700,000 in improvements made to it but is still assessed at “the value that existed when it was sold as a vacant property.”
Also, $600,000 in improvements were made to the Shields Automart dealership by I-57, yet its assessed value increased by just $100,000, Schuering said.
Additionally, the Cobblestone Hotel & Suites that was built west of I-57 was not assessed as a hotel until “the year after the property was subdivided and the building had been complete for virtually a year,” he said.
“The TIF (district) will never financially perform correctly unless the assessment problem is resolved,” Schuering said.
A second factor for the TIF district underperforming is the lack of development on land on the east side of I-57 owned by Mr. Warner’s estate. Prior to Mr. Warner’s death, the land was eyed for a large development that was to include hundreds of new homes, a senior-living community and a variety of restaurants, retail stores and manufacturing facilities.
Schuering said that prior to Mr. Warner’s death, Schuering and Mayor Bill Ingold tried to work out a price with Mr. Warner for the sale of some of his land to two “national retailers” interested in developing there. One of those retailers was Shopko, which closed all of its stores last month after going bankrupt, Schuering disclosed last week. Neither retailer came to Paxton, though, because Mr. Warner “refused to give us a price on the land unless we told him who (the buyer) was.”
“When that problem occurs, it makes it very difficult to do deals with people,” Schuering said.
And since then, city officials have had “repeated, lengthy, ongoing discussions and negotiations with the (Warner) family representative that have led us nowhere,” Schuering said. “(The Warner family) also (is) developing a tract down in Rantoul, and it’s pretty apparent that their resources have gone down to Rantoul and not up here to this property.”
While selling the Warner land has been a problem, so is building the 800 feet of road that would connect Ottawa Road to where any development would be built, Schuering said. The road — estimated to cost $1 million — would replace and extend Centennial Drive, but Schuering said “it is clear from our previous discussions with the (Warner) family that they are not inclined to put any money” toward such infrastructure.
An alternative location for a road linking Ottawa Road to the Warner land would be just east of the Paxton Church of Christ.
“It’s a much less expensive (project), but it requires acquiring land from the church, the adjacent landowner and from the Warners,” Schuering said.
A third factor for the TIF district underperforming is Paxton’s location on I-57, roughly midway between Rantoul and Gilman — two cities that already have brought numerous restaurants and retailers to their respective interstate interchanges.
“That is going to make attracting some large retailers — for example, a national brand convenience store — difficult,” Schuering said.
It makes it that much more difficult, Schuering added, when the national retailers that the city has been in contact with have indicated they would want to develop on the east side of I-57 — on the Warner-owned land — and not the west side.
Schuering said he still thinks land on the interstate’s west side would make for a good spot for a national retailer, though.
“The performance of the hotel (there), in terms of its occupancy, would say that if you put a good new contemporary facility out on the west side, it will succeed,” Schuering said. “From the information we have, their occupancy numbers are routinely substantially above what projections were when (the hotel’s operation) started.”