Highland News Leader

Highland paid $41K to be told town is ‘blighted.’ Now the city can levy new sales tax.

Is this “blight”? According to a recently city-commissioned study, this driveway in Highland exhibits blight because it has grass or weed growth in its asphalt surface.
Is this “blight”? According to a recently city-commissioned study, this driveway in Highland exhibits blight because it has grass or weed growth in its asphalt surface. clibbra@bnd.com

A large chunk of the city of Highland suffers from “blight,” a city-commissioned study says — a determination that gives city leaders the legal reasoning needed to implement a new sales tax without voter approval.

The Highland City Council hired the Edwardsville-based consulting firm Moran Economic Development in July to draft a “redevelopment plan” that would create three new business districts as a way to foster economic development and pay for a new public safety building.

“This plan is projected to provide a revenue source for funding for the new Public Safety Building as well as identify development opportunities, including potential redevelopment of underutilized properties, key future commercial development sites and areas that should be targeted for conservation,” Assistant City Manager Lisa Peck and Police Chief Terry Bell wrote in a joint memo to council members back in July.

The three new business districts would be as follows:

▪ District A: Northtown and areas along Walnut Street and U.S. Highway 40.

▪ District B: Downtown district including areas along Broadway and Highland Road.

▪ District C: Centered along Frank Watson Parkway, much of which is still undeveloped.

Large swaths of the proposed business districts would overlap with current city tax increment financing districts and Madison County’s Discovery Enterprise Zone.

The redevelopment plan analysis — for which the city paid Moran $41,900 to complete in seven weeks — comes to the same conclusion in each of the study areas: blight is an issue, though the study’s author said it’s not as bad as it sounds.

“The standard of blight in business districts is not extreme,” said Keith Moran, president of Moran Economic Development. “It is not to the extent of every property falling down.”

The language of the study, however, paints a different picture. The study says blight conditions in all three areas “create a menace to public health, safety and welfare.”

The study goes on to conclude that each area of town, since 2011, “has not been subject to growth through private enterprise” and it “would not be reasonably anticipated to be developed without the adoption of the Business District Development or Redevelopment Plan.”

The best way to fix the issues outlined in the plan would be to implement a new 1 percent sales tax in each of the three areas, the study concludes.

“It is a targeted economic development tool,” Moran said. “That is absolutely what I like about.”

Where the money would go?

Right now, Highland’s total sales tax rate is 7.85 percent. A 1 percent sales tax increase would bump that rate up to 8.85 percent on certain retail goods. Items such as cars, groceries, and medical goods, both prescription and non-prescription, would not be subject to the tax. But even without taxing those items, estimates are that the new tax could bring an extra $1 million into city coffers.

The largest project would be a new public safety building. Combining police, fire and EMS services into one building has been on the city’s wish list for some time.

The second stated use for the new tax money would be to bolster business within each district. That could mean spending it in a number of ways — upgrading roads, sidewalks and utilities, improving storm water drainage, streetscape improvements, getting tenants into existing buildings, and eliminating any issues of blight, whether they be on public or private property.

Why now?

Highland City Manager Mark Latham said the City Council met last summer to rework the city’s strategic plan and “the public safety building/police station was their No. 1 priority.”

The problem was how to pay for it. About five years ago, the plan to build a new facility near St. Joseph’s Hospital was in the $12.5 million range, Latham said.

City leaders have been rethinking that design and have been tossing around the idea of possibly building a police-only facility near the hospital and upgrading Fire Station No. 1 on Broadway, instead, Latham said, but a decision has yet to be made. Still, the money has to come from somewhere.

The TIF districts and enterprise zone have the same stated reason for existing as the proposed business districts — to encourage growth.

Enterprise zones include a number of business benefits to encourage development, including abatement of sales tax on construction materials and sometimes property tax exemptions.

TIF districts get money from “incremental” property taxes receipts, i.e. the difference in value between what property inside the district was worth at the time the TIF was formed and the present date. That money is then reinvested within the district.

However, Latham said they have just not generated enough cash to produce any results.

“The problem is that both TIF districts do not create enough increment to do anything,” Latham said.

When the city created its first TIF district, which basically incorporates the downtown area, an agreement was made with the Highland School District to reimburse it first with TIF funds. And that is where the majority of that money is still going, Latham said.

The second TIF district, which surrounds St. Joseph’s Hospital, gets its money mainly from the property taxes from the site’s medical office building.

“There really hasn’t been anything else developed in that area,” Latham said.

Latham said what money is generated there is put toward paying off the bonds that funded infrastructure improvements made when the hospital was built.

The city could will have extra cash on hand once the bonds are paid off for the Korte Recreation Center. The city uses about $450,000 per year in regular sales tax money to pay the KRC construction debt. However, the payoff date is not for two years.

Where’s the blight?

District A: According to the study, 63 percent of the 233 structures within District A “show some sort of notable defects in the structural components, which were common in the foundations, exterior walls, roofs, doors, windows, gutters, downspouts, siding and other fascia materials.”

The study also says 60 percent of the parcels “exhibit deteriorated surface improvements,” things such as cracked sidewalks, deteriorating roadway surfaces, potholes and crumbling asphalt.

The study states properties are at greater risk for fire damage because the primary water main along Illinois Route 143 is old and does not have enough valves to isolate a problem should a break occur.

“However unlikely, should the main experience a breakage at a time when fire suppression efforts were needed at any point along that stretch of IL-143 then the spread of fire could pose a significant threat to properties in the area,” the study says.

The study goes on to say the district has “improper subdivision or obsolete platting.”

Numerous parcels in the district need “splits or combinations, in order to be developed properly,” according to the study. The reason being such properties are “impossible to develop due to the limitations of their dimensions.”

District B: According to the study, District B, the downtown district, also suffers from “deterioration of site improvements.” It says 68 percent of the 464 structures in the district show visible signs of wear, which “can be attributed to general age.”

It further states 66 percent of parcels show the same sort of “deteriorated surface improvements” as mentioned for District A.

In addition, the district suffers from deteriorated utilities, water and sewer piping that is “antiquated.” Those old pipes mean an increased threat of fire, the study says.

“The aged and deteriorated utilities in the area could potentially limit fire suppression. Additionally, the undersized mains may be inadequate for sufficient fire flows,” the study says.

District B also suffers from “improper subdivision or obsolete platting,” according to the study.

“A number of the uses in the area have changed over time, and consequently the manner in which they were platted makes little sense for their current use and would hamper further land use,” the study says.

District C: According to the study, District C falls into the blight definition because, “the vast majority of the acreage is without access to right-of-way infrastructure.” The heart of the proposed area is bisected by Frank Watson Parkway, though there is only one major cross street, Sportsman Road.

The area is also “economically under utilized,” the study says.

It’s mostly farmland now, but according to the study, District C “should be experiencing a natural growth for commercial, light industrial and residential development.”

Again, “improper subdivision or obsolete platting” is an issue for this portion of town, according to the study. That results in “parcels that are difficult to develop to the highest and best use,” the study says.

“These difficulties can arise from the property’s incompatibility with modern development guidelines or even the city’s subdivision code. Numerous properties in the area exhibit this factor, with property lines that are not congruous with development friendly guidelines,” the study says.

Tell the city what you think

The city of Highland will have three separate public hearings Tuesday, Sept. 5 on the idea of creating the three new business districts. The District A hearing will be at 5:30 p.m. The District B hearing will be 5:45 p.m. The District C hearing will be at 6 p.m. After all the hearings, the regular City Council meeting will then begin at 7 p.m.

Reporter Megan Braa contributed to this story.