TIF funding scrutinized in Batavia, St. Charles
BATAVIA – North River Street is sporting streetscape improvements, and several businesses have opened or plan to open in the downtown as a result of the city’s use of tax increment financing funds.
But not all residents and aldermen agree with how the funds are used. Batavia resident Jack McCabe said he believes the $3.5 million the city is spending on the North River Street project is a waste of money. The project is being funded with funds generated from the two active downtown TIF districts.
North River Street, which recently has reopened to pedestrian and vehicular traffic, has been transformed into a curbless street in which pedestrians have priority over cars. The project is expected to be finished by spring. McCabe said the decrease in parking will hurt the restaurants and other businesses along North River Street.
“Where can people park?” he asked. “They can’t all park in the parking garage.”
Batavia is not the only community receiving scrutiny for its use of TIF funds. In St. Charles, a group of residents opposes the creation of a TIF district for the proposed Lexington Club housing development.
State law requires a TIF redevelopment meet criteria, such as blight and conditions that lead to blight. Once a municipality creates a TIF, its property assessment is frozen and new or increased taxes generated by improvements are used to pay for improvements or other development incentives. These include buying land, razing buildings, relocating a business and rebuilding streets, sidewalks and utilities, among others. State law allows a TIF to exist for 23 years while its diverted taxes pay for improvements.
Batavia also uses TIF funds as business incentives, specifically through its facade and downtown improvement grant programs and redevelopment agreements.
The Batavia City Council has approved several downtown improvement grants in the past year. But not all have been with the unanimous approval of aldermen.
Aldermen in September voted, 11-3, to give Kay Eck of Wheaton a $25,000 downtown improvement grant so she could open a yoga studio on North River Street. The project is expected to cost $121,251.
Also, Batavia aldermen in October voted, 9-4, to give Batavia Enterprises a $25,000 downtown improvement grant. Batavia Enterprises owns the building at 8 W. Wilson St. in downtown Batavia, the former home of Lane Allen Architects, and requested a $25,000 grant to renovate the 1,555-square-foot space into a coffee shop for Limestone Coffee & Tea.
Limestone closed its cafe in November at the corner of Wilson and North River streets after being in the building since September 2007. The Rhino Room restaurant has moved into the space.
The City Council in 2009 established the downtown improvement grant program, which provides building owners with up to 50 percent of actual improvement costs.
Fifth Ward Alderman Eldon Frydendall voted against the grant.
“I don’t think that we are being fair to businesses that have been around for a while and are trying to survive,” Frydendall said at the time.
McCabe said he would rather see the city give out new businesses loans instead of grants.
“The city is not looking at their return,” he said. “They just look at vacant buildings.”
Batavia MainStreet Executive Director Joi Cuartero said the MainStreet organization views TIFs as an important tool for economic development. The organization’s mission is to “enhance downtown Batavia’s identity as the heart of the community.”
She noted that the grant program goes to funding permanent improvements to buildings “so we can get these properties up to snuff.” Cuartero urged those downtown business owners to apply for the city’s incentives, as well.
Batavia city officials have pointed to the success of TIF funding in getting Water Street Studios up and running. To get the project off the ground, aldermen voted to give Batavia Enterprises up to $125,000 in TIF funds. Water Street Studios opened in 2009.
TIF districts are not welcomed by all. In St. Charles, a group has gathered more than 600 signatures on a petition against the creation of the Lexington Club TIF district.
Joseph Masiokas, chairman of the group 2R2R: River to Randall, Railway to Route 64, sent a letter to aldermen stating the group’s concerns, including that “St. Charles residents are vehemently opposed to helping a residential developer add more units to the housing stock at a time when the number of vacant properties in the city is approaching 500 units.”
The proposed TIF district would encompass about 45 acres on St. Charles’ west side that developers want to transform into a 125- to 130-unit residential development called Lexington Club. As part of the proposed $6 million TIF agreement, the city would reimburse the developer for costs associated with demolition, site leveling and environmental remediation in an amount not to exceed $6 million.
“The city recognizes that those costs are extraordinary,” St. Charles Economic Development Director Chris Aiston said.
Aiston said the property could add about $57 million in overall assessed valuation to the city once it is redeveloped. City officials said it would be the city’s first truly residential TIF district and would operate on a pay-as-you go system, bringing no financial risk to the city.