PAXTON — When Paxton implemented its first tax-increment financing (TIF) district six years ago, city officials envisioned the economic-development tool being used to build hundreds of new homes, a senior-living community and a variety of restaurants, retail stores and manufacturing facilities around the Interstate 57 interchange.
At that time, Rantoul developer Joe Warner had submitted to the city a lofty proposal to bring such development to land he had purchased there. All of those plans, however, were put on hold after Mr. Warner died a year later, leaving the yet-to-be-developed land’s fate — and, in turn, the success of Paxton’s TIF district — to his estate.
Since then, the Warner estate has done nothing with the land it owns on the southeast side of the I-57 interchange. And with the clock ticking on the TIF district’s 23-year lifespan, city officials are growing increasingly concerned that it will fall far short of its expectations for economic growth.
"Until something starts to happen with that ground ... the TIF can’t realize its full potential," said the city’s TIF consultant, Springfield attorney Dan Schuering, during Tuesday’s annual meeting of the TIF district’s joint-review board. "You run the risk that the ground out there will remain farmland for the remainder of the TIF."
Also concerning, Schuering said, is that without further development along the Ottawa Road corridor around I-57, the city may have trouble meeting its obligations to make annual payments to the Paxton-Buckley-Loda school district.
Under an agreement made following the TIF district’s implementation, the school district is to receive at least $6.5 million in tax revenue generated from development in the TIF district over its 23-year lifespan. Schuering said the city currently owes $118,000 and will owe twice that amount by the end of this fiscal year.
Schuering said the city would not have entered into the agreement "if there was any reasonable belief that the Warner land would remain undeveloped for five to seven years." The amount to be paid to PBL, Schuering noted, was based on the financial harm to the school district that would have resulted from the hundreds of new homes being built.
Still, Schuering said, "We made a deal."
Developments a priority
The success of the TIF district — and the city’s ability to pay PBL — will rely on developing the Warner land and other property near I-57 in upcoming years, Schuering said.
"That obligation to the school district will very quickly become a problem for the TIF if we do not get some more commercial development," Schuering said. "We have been in discussions with (the Warners) for over five years, trying to get some movement out there. The city needs to focus on figuring out how we can come to an agreement with them and get it done.
"So that’s something that we’re going to have to talk about in the course of the next year, and we’re going to have to develop a plan to retire (that debt)."
One goal of the city in upcoming years, Schuering said, should be to land a commercial development on the Warner-owned land immediately east of the I-57 interchange, near the Subway restaurant. The problem with redeveloping that area, however, is that the Warners’ land is being listed at too high of a price, Schuering said, and infrastructure improvements would also need to be made with the developer paying for them up-front.
"It’s a tough deal to do," Schuering said, noting any development in that area would likely need to be done in phases. "But we have to get that started."
Mayor Bill Ingold said a pair of businesses had been "looking at the property east of the interstate."
Centennial Drive issues
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 it would need to be wider than can be currently accommodated.
"The way the engineers have drawn the road, literally the back of the curb is at the edge of (the Subway restaurant’s) stoop," Schuering said. "So that’s a problem that has to be dealt with somehow."
Schuering said city officials have had discussions with the Subway building’s owners and the owners of the restaurant about potentially moving the building, but he said he feels "their expectations are unreasonable."
"We just have to continue to try and talk with them and see if we can make something happen," Schuering said. "And if we get to a point where we’re ready to do Centennial Drive and we have a realistic possibility (for a development) out there, then we may have to take a different approach to the owners of the Subway building in order to reach an agreement."
West of I-57
Another priority will be continuing the commercial development west of I-57 along Ottawa Road, in the area around the newly built Cobblestone Hotel & Suites, Schuering said.
Land owned by the Glazik family east of the hotel has been eyed for a new restaurant.
"In the next year, we need to be talking with them about: ‘What is your plan for the rest of the land? What is it going to cost? What do you want to put out there? How do you want us to help you?’" Schuering said.
Continuing to renovate buildings and add new businesses in the downtown area should also continue to be a priority, Schuering said.
"There are two or three things in the works that, if we could get them done during calendar year 2019, they could provide some significant additional horsepower to the TIF starting in 2020," Schuering said. "There’s a great deal of interest — and there has been in the last year — in several of the older vacant buildings in the downtown. And there’s at least one that’s the subject of some pretty significant discussion right now, with at least one of the parties looking at investing, after purchase, an additional $800,000 in the building. So that is really good news for the downtown portion of the TIF. Those are things that we have to continue to get done to push up this total (generated by the TIF district) on an annual basis."
Unlike the I-57 area, the TIF has been working in the downtown, Schuering said. While a number of property owners have taken advantage of TIF-related reimbursements for improving the appearance and conditions of their buildings, perhaps even more encouraging is that some property owners are even completing such projects on their own with no help from the TIF, Schuering said.
"Those are the types of projects that we want to continue to attract," Schuering said.
Blighted residential properties along Market Street and Ottawa Road could be addressed, too, to generate more money for the TIF district, Schuering said.
"There’s property along Ottawa that very little attention has been paid to," Schuering said. "And if you go south of the corner lot where City Hall is, we really have not talked about anything farther south on Market Street or anything going out Ottawa.
"There’s been some interest over the last couple of years with individual parcel owners out there wanting to do different types of things, but we need some ideas on what the city council thinks that area ought to be and some ideas from who’s out there and what they might be interested in doing ... and how we might go about causing some development out along there."
Revenue/expenses for TIF
As of April 30, the end of the city’s 2017-18 fiscal year, the TIF district had generated $119,993 in property tax increment over its first five years, according to a report filed by Schuering with the state comptroller’s office.
Of that amount, $27,477 remained as of last April in a "special tax allocation" account under the city’s control. The account, which contained $22,055 one year earlier, receives all of the new property tax revenue created following development in the TIF district that is beyond what taxing bodies had already received from those properties prior to the TIF district’s implementation. The city can then use the funds to reimburse property owners’ costs.
While not included in the report for last fiscal year, Schuering said the balance in the special tax allocation account had risen to $91,184 as of this month, after it collected $67,714 in tax increment last summer.
"We expect that number to go up significantly again (next fiscal year) when we get the new (equalized assessed valuation) numbers from the assessors after the first of the year," Schuering said. He pointed out that among the recently developed properties that will be generating more tax increment for the TIF starting next year are the new hotel on West Ottawa Road, the Remembrance Hall building downtown and the new NAPA Autoparts store on West Ottawa Road.
"Each of those should add some additional EAV to the total to push it up even further," Schuering said. "So I think that there’s going to be another healthy increase (in tax increment) next year. I don’t know if we’ll get to $100,000 a year — I hope so — but we’re getting there."
Schuering hopes enough money can be generated that the city can start making payments to the school district starting next year.
"Are we going to meet the exact payment schedule? I don’t know," Schuering said. "Should we be able to start making some significant payments against it? Yes, and it’s got to be a priority going forward."
A total of $68,344 was deposited in the special tax allocation account last fiscal year, and of the $62,923 in expenses in the TIF district last fiscal year, $58,991 was for engineering completed for the city’s downtown streetscape improvement project, Schuering said.
The joint-review board is comprised of one member from each of the following taxing bodies, plus a member of the public selected at large: the PBL school board, the Paxton City Council, the Ford County Board, the Paxton Park District board, the Paxton Fire Protection District board, the Paxton Carnegie Library board, the Parkland College board and the Patton Township board.
Not all had representatives in attendance for Tuesday’s meeting. Present were Dave Dowling, representing the school board; Denny Kingren, representing the fire protection district; the mayor, representing the city; and Ron Lenington, the public’s at-large representative. Also present was PBL Superintendent Cliff McClure.
The joint-review board is expected to meet again sometime after the start of the city’s next fiscal year on May 1.