Elmhurst Officials Examine Potential of New TIF Districts

An outside consultant is recommending that the city further study the prospect of tax incentives to redevelop at least three areas in Elmhurst.

Chicago-based Kane McKenna and Associates proposed Monday that York Street north of North Avenue, the area of York and Vallette streets, and Riverside Drive be considered for redevelopment via public finance programs, including tax increment financing (TIF).

TIF districts freeze assessed property values for local taxing bodies for up to 23 years to encourage redevelopment in areas considered blighted. TIFs generate new revenue through new construction in the TIF district, or if the township assessor increases the assessed value of the properties in the TIF district. The difference between the frozen property value and any new assessment or growth goes into the TIF fund. The city then uses this money to pay for any public improvements or help finance redevelopment projects in the district.

"(TIFs) are not a silver bullet for everything, but we are sitting on some success stories in town that we can point to," 6th Ward Alderman and Development, Planning, and Zoning Committee Chairman Steve Morley said.

TIF districts in Elmhurst are currently located within City Centre, the area of Lake and Walnut streets, and Route 83 and St. Charles Road.

Mayor Pete DiCianni indicated TIF may be a good tool to use for future Elmhurst development as well.

"We’ve come a long way, and it's because of leadership in the past that's planting seeds for the future," he said. "And I look for the leadership on this council to do the same."

North York Street

Using preliminary numbers, Kane McKenna reported 111 structures and 162 tax parcels boasting $35.3 million of equalized assessed value in the North York Street study area, which extends from North Avenue to Grand Avenue.

About 62 percent of the structures in the area are at least 35 years old, and commercial vacancies, including two vacant car , are sprinkled throughout. Kane McKenna also cited inconsistent building setbacks and inefficient traffic flow near the industrial properties.

Consultants said redevelopment options in the area include the creation of a TIF, a business district, and a special service area, or A business district, once approved by the state, would allow the city to impose an additional sales or hotel tax up to 1 percent within the district to fund public improvements.

Additionally, a TIF in the North York area would benefit from the neighboring City Centre TIF via "porting," or the ability to transfer TIF funds between adjacent TIF districts.

"In the existing TIF downtown, let's assume it's been very successful and you have a fund balance of several million dollars, and one of these key projects is going to occur in the north," Charles J. Biondo, senior vice president at Kane McKenna said. "Once it's formed, you could theoretically take fund balance from the downtown TIF and use it for the north TIF to get it off the ground."

York and Vallette

Kane McKenna staff lauded the south Elmhurst area for offering "users and tenants access to an important segment of the marketplace," but they also cited "piecemeal" development, numerous vacancies and lagging EAV.

Consultants reported 57 percent of buildings in the study area to be 35 years or older, and about 30 structures and 47 tax parcels cumulatively worth $8 million in EAV. They recommended further review of TIF, business district, and SSA potential in the area, which consultants said also appears to have "limited" larger scale redevelopment options due to parcel size and existing uses.

Riverside Drive

This area has frontage along Route 83, but also suffers from limited access and being located on the floodplain adjacent to Salt Creek. Thirty-eight percent of structures in the area appear to be at least 35 years old, and the 24 structures have an EAV of $14.4 million.

Kane McKenna said it would be worth examining TIF potential, as well as an SSA or special assessment district, which allows the city to build a public infrastructure improvement and levy a fee based on lineal front footage or square footage of a property belonging to affected property owners who benefit from the improvement.

Consultants also said "new public improvements or land assembly and site preparation could be evaluated."

Other Areas

Kane, McKenna also examined the area of York and Butterfield roads, and Lake Street and Route 83, but recommended the city wait before using public financing to redevelop either area. Consultants said York and Butterfield has many adjacent unincorporated areas, and that the area may benefit from its proximity to the new Elmhurst Memorial Hospital without the help of public financing.

Consultants said that the city would also be better off waiting to see if industrial facilities in the Lake Street area "are signfiicantly downsized or modified" before pursuing public financing in the area.

Next Steps

Morley said his committee would take at least two to three meetings to vet options before making any decision on the Kane McKenna recommendations.

One immediate question is timing, and whether to implement a TIF district before or after a developer indicates a desire to invest in Elmhurst.

"Part of that has to be the 'chicken and the egg' conversation," Morley said. "I certainly don't want to rush, push the button on a TIF area and watch it sit for five years."

Another factor is whether other governing bodies, such as District 205, which receives about 90 percent of its revenue from local property taxes, are palatable to more TIFs.

City Manager Jim Grabowski said other local taxing bodies have received the Kane McKenna report and are "well aware" of the city's review.

Building Commissioner Bruce Dubiel said the city has a long, healthy relationship with District 205.

"The School District should embrace this," he said. "We have a track record of treating them well, in my opinion."

DiCianni said public financing may be essential to resolving "soil issues" in some of the study areas and remaining an attractive destination to new business.

"This tool will be able to put us over the finish line, hopefully, so we can attract the right businesses to our town," he said. "Other towns are putting (TIFs) in and are ready to go, so we need to be competitive."