Proposed Dempster/Dodge Tax Increment Financing District

1. 1
Proposed Dempster/Dodge
Tax Increment Financing (TIF)
District
City of Evanston
Public Hearing
May 14, 2012

2. TIF is a hyperlocal economic development tool -
the value created is recycled directly back into the district
2
TIF will give City and the property owner the ability to:
1. Attract strong quality retailers;
2. Minor property renovations / build out; and
3. Provide improvements to the public infrastructure and right of way

3. Improving Economic Climate and Change of Ownership
3
The center has suffered in recent years from deferred maintenance and high
vacancies resulting from a number of factors:
•economic downturn,
•the previous owner’s bankruptcy and the long receivership
•general restructuring of national retailers including consolidations, format
downsizing, bankruptcies.
•Local competitive pressures from Downtown Evanston, Old Orchard, Lincolnwood
Town Center, Howard Hartrey, and Main Street Commons

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6. “Stand Alone” TIF District –
Addresses the Current Market Reality
Allows for focused revitalization efforts
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•Not included in West Evanston TIF – designated (2005) / amended (2007) because
the assessed valuation of the property was too high;
•Current value “base” is at a level where redevelopment can be expected to
generate tax increment;
•Keeping TIF separate allows for targeted redevelopment / revitalization at
Evanston Plaza
•“Protects” increment in West Evanston TIF for designated projects within that TIF –
very distinct needs.

7. Short Term Goal –
Limited Upgrades/Space Reconfiguration/Attract Quality Tenants
(Requires Minimal TIF Investment)
7
1. Help reposition Evanston Plaza - improve occupancy levels, with “step above”
quality tenants
2. Neighborhood Commercial Redevelopment and Revitalization
3. Increased tax revenues from the property (both sales and property taxes).

8. Longer Term –Prepare for the Unknown
Retail World Changes Rapidly
(potentially greater TIF Investment required)
8
Allow increment to accumulate in preparation for the next major change in retail.
Longer term use of TIF could be used for:
1. Site preparation
2. Rehabilitation of structures
3. Job training
4. Construction of public improvements

9. TIF assistance is at discretion of City Council
9
Upon TIF designation:
1. Negotiate redevelopment agreement with developer that will yield the highest
number of quality tenants with limited expenditures on physical improvements
2. Determine level of public infrastructure improvements in public spaces / right
of way.
3. Proposed budget is based on projected increment collected over 23 year life of
TIF district and is intended as framework for potential funding.
4. If the city and property owner decide to move forward with a redevelopment
agreement to use a portion of the TIF budget, it will go through the public
process and requires city council approval

10. Proposed Dempster/Dodge TIF Staff Contact Information
Available to discuss tenant ideas, answer questions, etc.
10
Paul Zalmezak
City of Evanston
Economic Development Division
847.448.8013
pzalmezak@cityofevanston.org

11. 11
Overview
I. Background on Proposed TIF District /
Plan for Dempster/Dodge Corridor
II. Factors Qualifying Area as a TIF
District
III. Key Elements of TIF Plan

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• The Dempster/Dodge TIF Area
– Tightly “focused” TIF
– One project/one developer/one tax parcel
• Strategic Importance
– Important space for western Evanston
• Ongoing viability of major user (Dominick’s) important for
western Evanston residents
– Dempster major arterial road
– Based on location and traffic counts, has potential for success
• Has faced chronic vacancies past decade
– Despite location and strategic importance
I. Background

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The TIF Plan complies with key legal provisions of
the TIF Act, including but not limited to:
– TIF Plan conforms to the City’s Comprehensive Plan
– Area consists of contiguous parcels – exceeds 1 ½
acres
– “But-for” requirement is met - Redevelopment is
feasible only with the utilization of tax increment
financing
• As documented in the TIF Qualification Report (Appendix V
of the TIF Plan)
• As represented by the developer
I. Background

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I. Background
Specific
TIF
Objectives,
Strategies &
Measures
General Economic
Development
Goals
Comprehensive
Land Use Goals

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• City has considered alternative economic
development tools, with only limited success
• The City has considered, in succession:
– Financial tools other than TIF (sales tax sharing)
– Ongoing monitoring of owner proposals and/or new
tenant potentials
– Now considering TIF
I. Background

16. 16
I. Background
Review of TIF Financing
TIF involves splitting property tax revenue generated from
properties within the TIF District into two components or “buckets”:
Bucket for Base Revenues – For All
Local Governments
Bucket for Incremental Revenues – For
Redevelopment within TIF

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I. Background
Review of TIF Financing
- Ideally, a successful TIF produces positive incremental revenue over time
$0
$200
$400
$600
$800
$1,000
$1,200
$1,400
$1,600
1 2 3 4 5 6 7 8 9 10
Year
AssessedValue(AV)
Year Base AV Total AV

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I. Background
Review of TIF Financing
- In practice, a successful TIF faces certain challenges in seeking to generate positive increment
TIF Performance Adjusted for Project-Related Risks
0
20
40
60
80
100
120
140
160
180
200
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20
Base EAV Total EAV - Adjusted for Market Factors
Delay in
Project
Absorption
Reduction in
Growth
ASSESSEDVALUE
YEAR

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• The proposed TIF District is found to qualify
under the following criteria:
– Improved property - As a “blighted-improved area”,
based upon the findings that:
• A combination of 5 or more of the 13 factors set forth in the
TIF Act are present in the area
II. Qualification Factors

20. 20
Improved Property – Conservation Area Findings Underlined
II. Qualification Factors
1) Dilapidation
2) Obsolescence
3) Deterioration
4) Presence of
Structures Below
Code
5) Illegal Uses
6) Excessive Vacancies
7) Lack of Ventilation and
Sanitary Facilities
8) Inadequate Utilities
9) Excessive Land
Coverage
10) Deleterious Layout
11) Environmental Clean-
up
12) Lack of Community
Planning
13) Lagging EAV

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Obsolescence
II. Qualification Factors
 The area is economically and
functionally obsolete
– Economically, obsolescence is
manifested by the EAV stagnation +
declining market values + vacant
storefronts
 When one part of the City stagnates, such as
this area, this shifts the tax burden onto other
parts of City

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Excessive Vacancies
II. Qualification Factors
• The area has had numerous vacancies
– Situation has deteriorated in past 3 years
• Larger-scale vacancies occurring as well
– 52% vacancy as of January 2012
– Vacancy levels well in excess of
normal “churn”

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Vacancies
II. Qualification Factors

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Vacancies
II. Qualification Factors

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Vacancies
II. Qualification Factors

26. 26
Vacancies
II. Qualification Factors

27. 27
Vacancies
II. Qualification Factors

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Deleterious Layout
II. Qualification Factors
• Per the TIF Act, deleterious layout
evidenced by inadequate
ingress/egress, limited buffering vs
residential areas, and other indicators

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Environmental Clean-up
II. Qualification Factors
• Per the TIF Act, there are a certain
environmental problems that have required
remediation/clean-up expenditures
• Previously a contaminated area was:
– Remediated with an “engineered barrier” put in place
– Barrier limits re-use of portions of the site

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Inadequate Utilities
II. Qualification Factors
• Utilities are over 100 years old and use
obsolete materials
• E.g., combined sewers use outmoded
materials prone to breakage/outage such as
cast iron (modern materials include PVC
and ductile iron)

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Lagging EAV
II. Qualification Factors
• Equalized Assessed Valuation (EAV) of
the proposed TIF District has lagged
behind the balance of the City’s EAV
– Four of the last five years
• TIF Act requires a minimum finding for
three of the last five years

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Lagging EAV
II. Qualification Factors
2010 2009 2008 2007* 2006 2005
Total EAV for TIF
District
10,816,879 10,712,129 14,148,341 13,508,513 13,346,272 13,493,788
EAV Change
(%)
1.0% -24.3% 4.7% 1.2% -1.1%
City-wide EAV
(Excluding TIF)
3,031,067,208 3,295,277,240 2,924,249,551 2,758,831,516 2,232,546,474 2,229,259,234
City EAV Change
(%)
-8.0%
12.7%
6.0% 23.6% 0.1%
CPI 1.6% -0.4% 3.8% 2.8%
3.2%

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• Base EAV: $10,816,879 (2010 EAV)
• Projected EAV: Upon completion of redevelopment
and “re-tenanting,” approximately $30,000,000 to
$35,000,000
• Proposed TIF Budget: $20,000,000 (see next slide)
– The TIF Budget is:
• A maximum amount which does not obligate the City to
expend such amounts
• Sized to accommodate potential development requirements
• 23 year budget, not annual budget
• Proposed Land Uses: Retail, commercial,
institutional, and residential uses
• Key “but for” finding – redevelopment will not go
forward without the TIF assistance
III. Key Elements of TIF Plan

34. 34
Program Actions/Improvements Estimated Costs
Land Acquisition, Assembly, and Relocation $500,000
Site Preparation, Including Environmental Remediation, Demolition, and Site Grading $4,000,000
Utility Improvements (Including Water, Storm, Sanitary Sewer, Service of Public Facilities,
and Road Improvements)
$3,000,000
Rehabilitation of Existing Structures; Taxing District Capital Improvements $4,750,000
Public Facilities (including Parking Facilities and Streetscaping) $4,000,000
Interest Costs Pursuant to the Act $1,250,000
Professional Service Costs (Including Planning, Legal, Engineering, Administrative, Annual
Reporting, and Marketing)
$1,250,000
Job Training $1,000,000
Statutory School and Library District Payments $250,000
TOTAL ESTIMATED TIF BUDGET $20,000,000

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• Budget Guidelines
– Overall budget cannot be exceeded
– Line-items in budget are flexible
– Covers 23 years; hence difficult to estimate with
precision
– Budget expenditures subject to:
• City approvals
• Determination of appropriateness of costs
• Special TIF audit
• Review by JRB annually
III. Key Elements of TIF Plan

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Next Steps
• Clerk will continue to receive written
comments on the TIF Plan
• TIF ordinances may be introduced 14 to
90 days after the Public Hearing
– Subject to additional review/approval by City
Council
– Two open meetings with opportunity for
additional public comment