Deal Us All In—TIF 101 (Part 2)

As we discovered in part one, there seem to be potential problems with the proposed TIF assistance for the Lexington Club development. In this final part, we will look at potential ways that TIF assistance could be utilized to support the proposed Lexington Club development, in ways that will focus more on tangible public benefit while also attempting to reduce proportion of the tax burden that will be shifted to properties outside of the proposed TIF district.

For starters, let’s get rid of the notion that the demolition of the existing building and the leveling of the land are costs that must be borne by the taxpayers of St. Charles, as neither of them produce any tangible public benefit. The land could be developed in such a way as to not require the wholesale leveling of the topography (it worked quite fine as a productive site for nearly 100 years without any leveling of the topography), and the building complex that was demolished was a functioning complex as of 2005 that could have been rehabbed and given a new life (it could have become really cool loft apartments, or a small business incubator, or simply remained 220,000 square feet of affordable light industrial use). These two decisions seem to be completely the developer’s personal choice, and there does not seem to be any reason as to why the taxpayers of St. Charles should be made to pick up the tab for those choices made by the developer. 

The remediation of the environmental contamination is certainly a more real, pressing issue, as it concerns public health and thus has actual, tangible public benefit. Having said that, the developer’s claim for public benefit when remediation is required by State law, coupled with the reality that the public will be paying for the public benefit being performed, makes the public benefit claim ring a little hollow. However, given the very real possibility that the developer could declare his LLC bust if the TIF assistance is not approved in some fashion, let’s park this one issue off to the side for right now.

What if we first focus on what the net gain and loss for the City and the developer under the proposal as it currently stands. The developer is asking for TIF assistance to cover expenses of $4.96 million related to the demolition of the Applied Composites building complex, leveling of the site, and remediation of the environmental contamination present at the site. Further, they are asking for an exemption to the St. Charles inclusionary zoning provisions, which requires that 15% of the total housing units they build meet affordability guidelines.  The developer has put a price tag on this requirement at between $1.25 million and $1.5 million (the developer has promised a good faith effort to secure outside funding to subsidize these units, but if no outside funding can be found, no affordable units will be built). Additionally, the developer has asked for a deviation from St. Charles’ zoning requirements with regards to the exterior siding requirements.  Specifically, they have asked permission to use vinyl siding in lieu of more expensive materials required by the code.  It is hard to put a hard dollar figure on the value of this exemption, but just for the purposes of illustration, let us assume that this exemption represents a cost savings to the developer of $1000 per unit constructed, or $143,000 across the entire proposed development. Thus, the total value of the concessions requested by the developer is as much as $6.35 million to $6.60 million.

If the City makes these concessions, what does it get in return? What concessions is the developer making to the City in exchange for the City making more than $6 million in concessions? State law mandates that the developer must pay for the remediation of the property, so they do not seem to be doing us much of a favor there if we grant them TIF assistance. Our zoning laws require that 15 percent of the homes built must be affordable, but we have no idea how many (if any) affordable homes will actually be built if we grant them that concession.  Last, our zoning laws set a certain standard of quality of materials in the construction of homes in St. Charles, but these homes will not meet that standard if we grant them that concession. Is the City getting anything that is above and beyond normal in exchange for the requested concessions?

What if we now look at a scenario that considers the public benefit a little more seriously? What if we look to create a “grand bargain” that goes beyond what has been proposed, creates a bigger economic package than is currently on the table, and uses that scale to leverage more lasting, significant improvements to our community than what has been proposed? What if, as part of this bargain, the developer makes some significant changes to the design of their development (aren’t both sides supposed to make concessions in a negotiation?), to be more accommodating to the desires of the neighborhood that will have to live with the development long after the developer has moved on to the next town? 

As highlighted in a previous blog post, , the redevelopment of the Applied Composites site is a one-time-only opportunity for this town; no other tracts of land of this scale exist so close to the downtown area that does so much to define what this town is.  When the founders of this town originally developed downtown St. Charles, they did so in a manner that we now call “sustainable development.” They would not have called it by that name, they would have simply called it common sense (why would you want to live in a town where you could not get to virtually everything on foot or bicycle?). It is sustainable simply because of the fact that it is possible to live, work, recreate, worship, shop, get to public transportation, etc., all on foot or bicycle; a car is not absolutely mandatory to live in this neighborhood. 

With the Applied Composites site, we have an incredibly rare opportunity to return to our roots, embrace what urban planners now see as “sustainable design” or “New Urbanism,” and help to place St. Charles on the map by showing the way forward for city planning. Through sensitive, creative, inventive planning, we can attract a willing pool of buyers who do not want to live in a more “traditional” suburban setting, yet want the amenities and schools that come with living in downtown St. Charles. People like that tend to be willing to pay a premium for the lifestyle that they desire, and the developer stands to make a profit from this pivot in marketing strategy, which is not a bad thing either, as he is in business to make money.

Given all that, what if the development was changed to be a mixed-use development, following the principles of New Urbanism (see here and here) through and through? This would provide a place for businesses to locate there (always a good thing for a community), the new businesses could be located at the edges of the site, which would provide a buffer for the existing light industrial users already in the neighborhood (we do not want to lose those important members of our neighborhood), and would help to preserve the character of the existing historic neighborhood.  As a mixed-use development, there would be new businesses in the neighborhood, which would be good for the City’s coffers. Additionally, switching to a mixed-use development would lower the number of new users for various governmental agencies (schools, park district, library, etc.), which would place less stress on their budgets than would the current proposal. Furthermore, study after study has shown that New Urbanism developments consistently help to elevate property values in the surrounding areas (see here, here, here, here, and here )

Second, what if the development took a very aggressive stance towards sustainable design, and helped to put St. Charles on the map in terms of forward-thinking for neighborhood planning? What if the streets, driveways, and sidewalks were built out of grasscrete or filtercrete? (see a mind-blowing video here )  This would drastically cut down on the amount of storm-water flowing from the site, could eliminate the eyesore of yet another set of mosquito-breeding retention ponds, and would free up the developer to use that land for other purposes (a serious neighborhood park with room for a basketball court and tennis courts?).  Furthermore, the housing units could all be equipped with rainwater cisterns, so that lawn and garden watering could be accomplished largely without being a drain on the City’s well water resources (and this would also help to cut down on storm water run-off). Streetlights could be LED lights, while the homes themselves could be designed to take advantage of winter solar gain, while shading themselves against harmful summer solar gain. The homes could be super-insulated homes, reducing their dependence on fossil fuels, utilizing beefed-up traditional construction, straw bale construction (see here and here ), structural insulating panels (see here ) or Hebel blocks (see here and here ) … and that is just the beginning. A low-environmental-impact lifestyle is possible in this proposed neighborhood simply because of where it is located; why don’t we make the buildings and infrastructure live up to that potential as well? (see here )

Next, let’s look at the public benefit that a TIF district (or some other funding vehicle) could accomplish in the neighborhood surrounding the proposed development. Money could be used to pay for new super-efficient LED streetlights (see here ) throughout the neighborhood. The cost savings realized by the City from this improvement (LED lights last longer and use less electricity than the current standard, and they also keep the light focused on the street, not streaming in through your bedroom windows all night long) could then be used to pay for more LED streetlight retrofits across town, creating a chain-reaction improvement where the first improvement actually funds the next set of improvements until the whole town has been upgraded. New sidewalks could be installed where they have never been, helping to further encourage the pedestrian culture that already exists here.  New pedestrian connections could be made under the railroad tracks to tie the Timbers development into this neighborhood, enabling residents in the Timbers, for the first time ever, to walk or bike to downtown St. Charles via a safe and efficient route. I am sure other community members will have other ideas on what could be accomplished; I am eager to hear them.

Last, let’s look at the public benefit that a TIF district (or some other funding vehicle) could do for the businesses in the neighborhood surrounding the proposed development. Most of those businesses are housed in structures that, while still perfectly serviceable, are incredibly inefficient to heat, cool, and light.  Old single-pane steel sash windows are the norm, as are F96T12 fluorescent lighting fixtures, which are so inefficient that they are being outlawed in this country effective Jan. 1, 2012. Most of the commercial/industrial buildings in the neighborhood probably lack adequate insulation and are, quite simply, inefficient and expensive to operate.  What if we allowed the owners of those buildings (who provide tax base and jobs for us) to access some of the money captured by the TIF district, with the requirement that they use the money to fund energy efficiency upgrades to their buildings? If they then took 50% of the utility cost savings that they realized through their energy efficiency upgrades to pay back the TIF district fund, this could be accomplished with little disturbance to the financial operation of the TIF district. In exchange, the businesses that operate in our neighborhood would be more efficient and thus leaner, meaner competitors in the marketplace, who are more likely to stay profitable and stay put. For that matter, we could extend this program to every homeowner in the district and we could have the “greenest” neighborhood in northern Illinois. That, in turn, would attract further investment from like-minded individuals.

The Applied Composites site represents what is possibly our only chance to develop and live in a truly “green” manner. Some people living in this neighborhood are fortunate enough to be able to walk to jobs located in this neighborhood—and actually do. All children in this neighborhood are able to walk to school, at least through the end of middle school. We are able to walk to get our groceries, to entertainment, to meals at restaurants, to public meetings at the Municipal Building, to the public library and to a host of other services. We are fortunate to be able to do this within the context of the “charming” quality that defines downtown St. Charles (which was the most important characteristic identified by the general public at recent comprehensive plan meetings). We have a chance to either help or to harm this way of life with what we ultimately develop on the former Applied Composites site. If we are wise, and work with the best interests of the future generations in mind, we can help to forge a new path forward in retooling what is already a sustainable neighborhood into something that is truly ready to take on the next century.

We can do this in a manner that is forward-looking by building and designing in the most efficient, least environmentally impactful ways, and creating more opportunities through mixed-use development for future generations to be able to live and work in the same neighborhood. “Green” can be more than a just a slogan—it truly can be a way of life, if the right opportunities are made available for our residents.  We can do all this in a manner that respects the past by being truly sensitive to the development patterns that have defined this neighborhood for over 100 years. New development should be mixed-use in nature, respect the light industrial businesses that have been here for generations, and be of a diversity of styles, scales and densities such that it respects the existing historic fabric of the neighborhood. If the developer is asking us for more than $6 million in concessions on a +/- $42 million project to help him achieve his goals, is it unrealistic for us to ask him to build us something that will help us achieve our goals?

In the end, we could settle for yet another conventional vanilla suburban housing project that likely will raise taxes on everybody else in town, all while handing the developer more than $6 million worth of concessions to accomplish the this OR we could go all in for a grand bargain, forge a new way forward, and develop a neighborhood of which we are all incredibly proud. Yes, we would be handing the developer some concessions, but he would also be making concessions to us in exchange. Isn’t that the way negotiating is supposed to work? Let’s not sell ourselves short with vanilla; let’s go all in.

Personally, I’m just not that into vanilla; I’m all in. How about you?