McEagle project costs explained
By Steve Berry
Progress Staff Writer
Shiloh trustees voted to move forward this week to establish a Tax Increment Financing (TIF) district in a 135 acre area of the Proposed McEagle Properties development south of Frank Scott Parkway and East of Green Mount Road. Trustees are expected to vote on final approval for a feasibility study for the TIF at the May 5 meeting.
The village has agreed to hire Rhonda Thomas, an attorney with Thompson Coburn, as bond counsel and Kathleen Field Orr as the TIF attorney. Costs are reimbursable if the TIF is established. Thomas’ fees are set at $27,500 and Orr’s at between $5,000 and $10,000.
“There are some extremely unusual costs that will be associated with this project,” said Shiloh Mayor James Vernier referring to McEagle’s plan at a special village meeting last week. “Creek realignment and a considerable amount of mine remediation have to be accomplished.”
At the meeting executives from McEagle Properties told Shiloh trustees about project costs, and discussed public funding for the $231 million development that stretches down Frank Scott Parkway from Green Mount Road to Cross Street, with the exception of land occupied by Three Springs Park.
McEagle's major costs include $17.7 million for property acquisition, $10.2 million for public infrastructure, $12 million for green belts, flood storage, and a lake, $48.7 million for land development, $23.7 million for mine remediation and $119 million for building construction. Of these costs, $112.2 million are eligible for tax increment financing (TIF). All aspects of the development are eligible for TIF except building construction. The developer is seeking $25 million in TIF benefits.
The land McEagle is set to develop into businesses, homes, and apartments is within an existing TIF district. McEagle and village officials said they would like to end the existing 23-year TIF district and establish a new one. The new TIF would not include land on the east side of Three Springs Park.
PROJECT COSTS
McEagle estimates public infrastructure costs will exceed $10 million with roadwork being a major part.
Chris McKee, president of McEagle, said traffic signals and lanes would be added to Frank Scott Parkway and Green Mount Road to support the development.
McKee said it would be difficult to fund those road improvements without public support in the form of TIF, special service area (SSA), or business district designation.
Public funds for roads within the development would be used for "main trunk lines, said McKee. One of the roads planned may eventually continue south beyond the Three Springs Development to connect Frank Scott or Green Mount Road with Lebanon Avenue.
"If you remember in the village's master plan they had a road that started here, we had it on one of our very early plans...that went all the way down to Lebanon Road," McKee said. "The idea being if you can get a main trunk line down that entire road it opens up this whole southern area for development and sewers.”
Another major cost for McEagle is flood and storm water storage. McEagle plans to build a 13-acre lake within the development to handle storm water. An earlier McEagle proposal positioned the lake at Tamarack Golf Course. With that piece of property off the table, McEagle has been forced to move the lake into other developable area.
"We are still looking at that lake location because that is one of our biggest challenges," McKee said. "We don't want that lake there. That is our number one issue right now."
After building construction, land development is McEagle's second highest cost at $48.7 million. Within land development, earthworks, streets, sidewalks, storm and sanitary water lines, gas lines, parking and landscaping are eligible for tax increment financing. The next highest cost is mine remediation, at $23.7 million.
St. Ellen Mine burrows beneath a majority of the ground McEagle plans to develop.
"St. Ellen Mine, it sounds so benign...St. Ellen, but unfortunately it’s under almost the entire development," said McKee. "The mine remediation ended up being a bigger number than we had thought."
PUBLIC FINANCING
In addition to TIF funds, McEagle will seek public financing in the form of special services area (SSA) and business district financing.
TIF uses projected future increased tax revenue to help pay for the current project that will help create those gains through increased property values. As tax revenue increases, the extra revenue stays within the TIF district for life of the TIF district (23 years maximum). SSAs create an additional real estate tax within the district.
"They're basically taxing themselves and that money gets reimbursed back to them," Vernier said. Finally, business districts charge one additional percent sales tax.
"Its public knowledge when you go there you are paying one percent additional sales tax," Vernier said. "That money is captured and goes back to the developer to pay infrastructure costs."
At the meeting Vernier talked about misconceptions associated with public financing.
"When people hear the words 'public financing' they assume that somehow 'Joe' down at the end of the street down there is going to be paying for your (McEagle's) water," Vernier said. "They (McEagle) really are financing their own project in essence, and then the same with TIF. TIF is not taking the real estate taxes from (Village Engineer) Norm Etling's house and taking them and putting them in Chris McKee's checkbook. The real estate taxes that are collected in that TIF district that you see, they go into the TIF fund."
After the TIF district discussion McKee said he was eager to move forward with the project. Shiloh’s Green Mount Crossing and Villages at Wingate also incorporate TIF districts, SSAs and special business districts.
