Collinsville places hold on applications for TIF money to downtown program

Collinsville officials are in the process of deciding how they will make changes to the requirements in place for downtown businesses to request financial assistance from the city for projects in the form of tax increment financing money.

In the meantime, the City Council decided Monday night to place a hold on applications for TIF money to the city’s downtown program, except for a few applicants who have already received the bids for their projects.

It was also decided that the two requests for TIF money that were tabled during the March 28 City Council meeting will be considered at a later date under the current program requirements.

Within those requirements, a maximum of 40 percent of the cost of the work in each TIF application for structural rehabilitation and facade work can be reimbursed with council approval. A 90 percent maximum reimbursement and $90,000 limit is placed on work that brings a project in compliance with the city’s fire safety codes.

The standard staff recommendation to the council has been to award the maximum reimbursement for each application. That recommendation may vary in the future based on criteria that has not yet been established.

The current requirements place no limit on the amount of times TIF money can be requested for projects in Collinsville’s downtown area. A limit is placed, however, on the total amount of money that can generally be awarded for each project: $200,000 over five years.

Collinsville is “at the evolutionary point” of the downtown TIF program, Interim City Manager Mitch Bair said in an April 21 memo to City Council members.

“There should be a middle ground range of incentive determination and a reprioritized approach to the consideration of project eligible costs while using the caps (maximum reimbursements) as true caps,” Bair stated in the memo.

Other TIF districts in the city could be affected by the same changes that the downtown TIF program would face, according to Bair.

Several residents offered suggestions to the City Council during a special meeting Monday night for how they think the TIF program should change. Among their ideas were to eliminate things like beer garden fencing from the projects eligible to receive TIF money; transform the TIF program into a loan program for downtown businesses; lower the $200,000 total reimbursement limit on projects; and form a citizens advisory board to evaluate applications for TIF money.

Bair said residents aren’t the only ones who think the current program has problems.

“I think there obviously (is) the perception that there are some issues, you’ve seen from the memos that I’ve sent out, the conversations that have been had at the council level, and so that’s exactly why we’re here tonight,” Bair said during the meeting.

The City Council, Bair and other staff, along with representatives from the city’s planning commission, uptown development commission and Collinsville Chamber of Commerce were involved in the first discussion Monday, which was largely an explanation by Bair of the city ordinance that outlines the current rules for the program and the issues surrounding it.

Those issues range from language in the ordinance that has an unintended literal meaning — “the total of all projects within the downtown TIF program is $200,000 over a five-year period” should read “each project” — to whether project costs that are eligible under the Tax Increment Allocation Redevelopment Act should be included in the city’s application.

For David Jerome, chairman of the planning commission, TIF reimbursement should be given out based on “dollars and cents.”

“We are giving them money, I expect to see some type of return,” Jerome said during the meeting. “... It has to show job creation. It has to show increased sales. It has to show increased EAV (equalized assessed value). And that’s the criteria that you can objectively quantify to even determine the amount of money that you’re going to give.

“If they’re going to show that EAV is going to increase the value $100,000, well, now it can be a percentage of what that increased EAV is going to be because we know what our return is going to be on the back end.”

Wendi Valenti, executive director of the Collinsville Chamber of Commerce, provided numbers to the council to put the downtown TIF program “in perspective.” It is a part of the larger TIF district 1.

Of the whole district, the downtown program accounted for 4.1 percent of the TIF awards in 2014, 3.6 percent in 2013, and just 0.6 percent in 2012.

Valenti said those awards are largely benefiting small businesses, which she thinks offer a “very visible, very large return.”

“What you see on paper isn’t your total return,” she said during the meeting.

Bair suggested the commission representatives speak with the other members of those groups to develop recommendations for the City Council. Another special meeting will take place, likely in May, for officials to continue discussing the need for changes to the downtown TIF program.

Among the questions about the TIF program that the group will continue to consider are:

▪  Is there information the city should require but does not?

▪  Is there information the city should consider within the consideration of the incentive award but does not?

▪  What are the priorities of the program (code compliance, building appearance, business expansion, life safety, structural stability, signage, etc.)?

▪  What should be the highest priorities of the program (job creation, retail sales receipts, increased equalized assessed value, etc.)?

▪  Are there eligible items the city should remove from eligibility (professional services, fencing associated with outdoor dining and beer gardens, etc.)?

▪  Should the city consider a project’s business plan and is this within the realm of something the city government should interject itself into?

▪  Should the required ownership restriction of four years be maintained, modified or removed?

The City Council meets next will take place at 7:30 p.m. May 9 at City Hall, 125 S. Center St.

This story was originally published April 25, 2016 at 9:13 AM with the headline "Collinsville places hold on applications for TIF money to downtown program."