TIF tips the scale in favor of Sullivan development
Jan 27, 2013 (Herald & Review - McClatchy-Tribune Information Services via COMTEX) --
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SULLIVAN -- Although it had other options when its office in Sullivan was remodeled, Metro Communications President Zak Horn said it was encouraged to complete the work due in part to some of the economic development incentives the town offers businesses.
The company's options included starting over with constructing a new building or even relocating elsewhere in its service territory, Horn said. Metro Communications services cellphone towers with Horn saying most of its work has an association with Sullivan other than its office location.
Yet, with the aid of incentives offered by being located in one of Sullivan's three tax increment financing, or TIF, districts, Horn said its aging building at 8 S. Washington St. was fully renovated, giving it the modern amenities it needs and additional office space for a handful of other businesses to utilize.
"We made a decision to stay here," Horn said. "TIF was probably what tipped the scales. We want the business district to thrive. Nobody wants to come to work in an area that is falling down."
More than 30 businesses in Sullivan have used funding from its facade improvement program that is made possible because of the TIF districts, said Stepheny McMahon, Sullivan Chamber of Commerce and Economic Development director.
As leaders in other nearby towns such as Arthur explore the concept of using TIF districts to their advantage, they have reached out to learn from communities where it has been in use. Sullivan has used TIF since 1986, with officials there mindful that it needs to be used for the benefit of each taxing body involved, including the city, county, school district and fire protection district.
"That's the whole key to it working well," Sullivan Mayor Ann Short said. "It's a good economic development tool for small communities like ours that don't have the capability for making major public improvements."
With the way TIF is set up, money is generated without raising property taxes, Short said.
The first of Sullivan's three TIF districts that includes much of the town's commercial area was established in 1986 and later extended 11 years to now expire in 2021. With the way it has worked, Short said it appears leaders at the time were forward-thinking when it was created. The equalized assessed valuation within the first TIF area went from about $7 million to nearly $19 million as of 2010, according to information from the city.
The second TIF district was established to include Hydro Gear and is set to expire in 2026. Its valuation went from $106,270 to about $2 million in 1990.
The third was created in 2003 west of town to bring light industrial development. The valuation in that district went from $422,344 in 2000 to over $1 million in 2010.
In researching the topic, Arthur Mayor Matt Bernius has found the model of cooperation in Sullivan to be important. Arthur economic development officials have reached out to other taxing bodies in the area and community members to discuss the issues with them.
So far, three meetings have been held to gather feedback from other groups and share details of what city officials are thinking about.
"Many times in the past TIF has been slow to gain traction," Bernius said. "We want input from all taxing bodies. We really feel, if it's utilized well, it could be a good tool. We can do it without placing an undue burden on other taxing bodies."
Various taxing bodies in Sullivan have been able to benefit from having the TIF program in place. The Sullivan School District has had an agreement with the city since 2004, Sullivan School District Superintendent Terry Pearcy said.
"It's allowed us to do things in terms of building upgrades," Pearcy said. "There has been a long history of cooperation. It's a positive thing for us."
Between $700,000 and $800,000 has been generated for the school district, which Pearcy said has allowed it to fix parking lots, add a new roof to the elementary school, upgrade its track and build a science lab addition. Maintaining the district's infrastructure is important just like it is for a city, Pearcy said.
The city of Sullivan has used the TIF money it generates for infrastructure improvements, which McMahon said aids in trying to help businesses either expand or come to town.
"We can't try to attract businesses if we don't offer the infrastructure," McMahon said. "That's all a big part of it. It makes you use the money on community infrastructure."
The city has used TIF money for electrical and sewer upgrades along with work at the Sullivan Civic Center, Short said.
Moultrie County Board Chairman Dave McCabe said its TIF agreements have led to benefits similar to the other taxing bodies, such as a new jail and physical plant upgrades at the courthouse.
"Everyone has to keep an open mind," McCabe said. "We've been able to work with the city."
McCabe would like to see more economic development in rural areas of the county, but isn't sure how to do that as the TIF districts don't extend that far.
The TIF program has worked well for businesses inside the city, McMahon said.
Mel Workman, president of Quality Network Services, or QNS, has been renovating buildings on East Jefferson Street near the square in Sullivan for nearly 10 years. The first building that was renovated did not include as much work, especially on the facade, as a building that was done later after Workman found out more about the TIF program.
With the second project, Workman said the outside was greatly enhanced, but the work likely would not have gotten done without the facade program being available.
The business provides technology support for school districts throughout Illinois and Missouri, so Workman said it doesn't have the need for an attractive office in the way a retail business that has customers coming through its doors would.
"It has made a nice facility to work in," Workman said. "Every building along this stretch was empty and falling apart."
Short said city officials would like to find a way to attract and maintain more retail businesses in the downtown area of Sullivan.
Arthur officials are hoping businesses will one day find a similar experience there. They are looking to fix up an industrial area in town that could be subdivided for new manufacturing businesses, leading to such benefits as an expanded workforce.
Businesses have incurred the costs of upgrades in the past, but the work in the industrial area would be too much to handle without the city helping out, said Bob Doan, Arthur community development coordinator.
"We've always taken care of ourselves," Doan said. "It's unfortunate we didn't do it 30 years ago. Then we'd have some TIF funds available."
Creating a TIF program still appears to be a viable option to generate the necessary funding, Bernius said.
"We need funding to take care of the infrastructure," Bernius said. "We want to do it for the right reasons."
Having local officials being able to control the TIF program is a benefit, Doan said.
"That is huge in a small town," Doan said. "It's nice to do it on our own, but it's going to take a while."
Other towns, including Arcola, have established TIF districts in abundance. Arcola currently has five active TIF districts, with another closing down about three years ago, City Administrator Bill Wagoner said.
Arcola officials have thought in the past TIF was the answer for everything, Wagoner said. It has helped with such things as attracting manufacturer Herff Jones to town and helping Lindenmeyer Insurance create a new building at Ash Street and Illinois 133 that should soon be finished.
"It's not going to fit all situations," Wagoner said. "It is a dependable tool that we can count on."
From a business perspective, Workman said cities need to keep in mind that financial incentives need to be large enough to catch the attention of business owners and motivate them to start the most impactful and lasting projects possible. The Sullivan program was originally offering a few thousand dollars apiece to complete more projects, Workman said.
With businesses later being offered a $20,000 matching grant for work completed, Workman said, "It's a much greater incentive. It's large enough to think beyond what you otherwise would."
The facade program has helped create about $954,000 in investment and businesses that have participated improve their exteriors, McMahon said.
"We would not have had the money," McMahon said. "It's helped improve the look of the whole town."
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