Mary Hansen
The State Journal-Register
Two Rochester-based developers have plans to build nearly 130 houses on vacant land east of Hilltop Road. And they’re looking to the city of Springfield to help finance putting in streets, sewers and other infrastructure by establishing a new tax increment financing district. The project, dubbed River Chase Landing, is facing its first preliminary hurdle Tuesday, with the Springfield City Council set to consider a resolution declaring its intent to establish the TIF district.
Developers with Rochester Route 29 Group Inc. are promising union construction jobs and increased property values, which could bring in some much-needed cash to the city. But supporters must still prove the area can meet state criteria to become a TIF district. Further, they will likely have to address concerns from the Rochester School District, which would see its share of the real estate taxes stagnate for the life of the TIF, and criticism from some who say Springfield shouldn’t subsidize a new housing development that’s in a neighboring school district.
TIF districts freeze property tax revenue to school districts, municipalities and other taxing entities. Any additional revenue from rising property values, the “increment,” goes into a separate fund while the tax district is in existence, usually 23 years.
Developers John Stites and Todd Byers would take out a loan to pay for the construction of streets, as well as water and utility lines, for the proposed subdivision. They’d then sell the lots where buyers could build a new house, which they estimate would end up with an average value of $265,000. The taxes the new homeowners pay on the boosted property value would go into the TIF fund, part of which would reimburse the developers for the infrastructure.
According to Rochester Route 29, the subdivision would add about $17 million in real estate taxes to the TIF fund over its proposed 10-year lifetime.
Ward 1 Ald. Chuck Redpath is eyeing about $7 million of that to widen Hilltop Road and install storm sewers and gutters. Improving the road is part of the city’s long-term transportation plan, but securing funding has been difficult with the laundry list of road, sewer and rail projects.
Timing ‘not good’
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Rochester School Superintendent Tom Bertrand also is apprehensive about the prospect of another TIF district, given that the village of Rochester approved its first in March, which he opposed. Resistance from schools to establishing TIF districts is common as it caps — sometimes for two decades — the amount of funding the schools get from real estate taxes.
In the case of the proposed subdivision, families would send their children to Rochester schools, but their real estate tax dollars would initially go into the TIF fund, not to the school district.
“Unfortunately, the timing could not be worse given where we’re at with the state budget,” Bertrand said. “To further erode your property tax base when state funding is so uncertain, timing is not good for that scenario.”
Remitting a portion of TIF dollars back to school districts is often a deal struck to extend or establish the districts, which is what the school district and village of Rochester agreed to. A similar agreement is possible for the proposed TIF, but Springfield Mayor Jim Langfelder said that step may be premature.
‘Difficult to qualify’
After the council approves a resolution stating its intent to establish the TIF district, which could happen Tuesday, hiring a firm to complete a feasibility study and prove the area meets state standards to become a TIF would be the next step.
This residential district would be unique from most of the other eight districts throughout the city. Usually, TIF districts are in older parts of towns that haven’t seen new investment in years, with vacated buildings or dropping property values that meet criteria to be considered blight.
Ward 7 Ald. Joe McMenamin said he sees the need for the incentives in aging neighborhoods, but takes issue with help for development of “high-end” residential areas.
“With completely vacant ground, that type of land is much more conducive to development on its own,” McMenamin said, pointing out that subdivisions such as Piper Glen and Panther Creek were built without TIF incentives.
He also worries the district would set a precedent, encouraging any developer looking for help paying for infrastructure for new housing to ask for a TIF district.
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Peoria Road TIF
A study is underway for another proposed tax increment financing district in Springfield, along Peoria Road. The city contracted with PGAV Planners to complete the state-mandated study in September. Public hearings are expected to begin later this year.
Individuals, organizations or businesses can register as an “interested party” and receive information about the proposed district by contacting the city’s Office of Planning and Economic Development at 789-2377.
Joe McMenamin for Ward 7 