O'Fallon Progress

Former O’Fallon alderman: Developer has done little but is still getting TIF money

The view of the Rasp Farm TIF from Interstate 64.
The view of the Rasp Farm TIF from Interstate 64.

A local developer has refuted allegations from a former alderman who said Porter Road LLC continues to receive TIF distributions from the city for a development at the old Rasp Farm site, even though there has been no activity there for several years.

O’Fallon Ward 4 Alderman John Drolet questioned why the city is continuing to pay Porter Road tax increment financing distributions, even though there’s been minimal construction there in recent years. A retention pond and fire hydrants have been added to the property, but little else.

According to city documents obtained through a Freedom of Information Act request, Porter Road LLC has received three payments totaling $2.66 million since 2011. The last payment was dated nearly two years ago, dated April 21, 2014, for $250,000 from First Bank & Trust.

Steve Macaluso, a partner with Mark Holloran in Porter Road LLC, said he wasn’t even aware of Drolet’s concerns and dismissed the allegations.

“We have not taken a TIF payment from the city for the last three years,” he said. “We decided we shouldn’t take money if nothing is happening.”

Drolet, who served on the council from 2007-15, said Porter Road LLC has contributed no money to the TIF for the last five or six years.

We have not taken a TIF payment from the city for the last three years. We decided we shouldn’t take money if nothing is happening.

Steve Macaluso, partner in Porter Road LCC

Macaluso said the Swansea engineering firm Thouvenot, Wade & Moerchen Inc. is in the process of designing an Interstate 64 intersection at Lincoln Avenue, near the Rasp Farm development project.

The Rasp Farm TIF district is 101 acres in two sections and stretches from Lincoln Avenue, east along Interstate 64, and up to the Main Street/Highway 50 intersection in Shiloh.

In 2010, Rasp Farm was expanded into what at that time was the city’s TIF first district which the city established in 1995 along Illinois 158 and U.S. 50 in eastern O’Fallon. The Rasp Farm TIF contains the Lincoln Corporate Center and a large public drainage project.

The Rasp Farm TIF does not include the new Memorial Hospital just to the north or St. Clare Church, located on what was once part of the farm on the west side of Cross Street. Lincoln turns into Cross Street south of I-64.

Macaluso said Porter Road LLC is planning to widen Lincoln Avenue and raze the now closed strip shopping center that housed Schmitt Music this summer.

When the city expanded the Rasp Farm TIF in 2010, the city wrote a $1.5 million check to Porter Road LLC, which planned to develop RASP with small and medium-sized office buildings, Drolet said.

The original TIF District 1 encompassed an area that included MotoMart at U.S. Highway 50 and Troy-Scott road. In 2010, the city expanded the district to include Rasp Farm.

“The expansion allowed the city to tap into the existing funds in that TIF (approximately $1.5 million), and give it to the developer,” Drolet said. “To date, the only development is they built a retention pond on the east side of the property. They recently shuttered the only office building on the property. No taxable improvements to the property have been done. ...”

Payments stopped in 2014

The first invoice from the city does in fact show the city paid Porter Road LLC $1.5 million on July 13, 2011. The city made a second payment on Feb. 3, 2014 for $913,397. On April 21, 2014, the developer received another $250,000. There have been no distributions since.

In a TIF district, future property tax growth is diverted from taxing districts such as schools and used to develop the area. TIF districts have been used in Illinois since the 1980s.

Drolet said Porter Road LLC used much of that money to acquire the farmland, which for a long time was in Shiloh’s corporate limits, and the now vacant Schmitt Music Center building at 1400 Lincoln Ave. in O’Fallon. It also built the retention pond and installed fire hydrants.

“But other than that, there have been no improvements made to the property in the last five or six years,” he said.

Former Ward 3 Alderman Rick Reckamp, agreed with Drolet, saying the developer needs to build something on the site.

“I think what the developer is doing now is sitting on their hands, waiting to see what’s going to happen with the hospital and the economic growth in the area,” he said.

Macaluso said up until last Friday, Porter Road LLC had 16 acres under contract with an unnamed East Coast developer that was planning to build an adult senior living project at Rasp Farm.

“But we got a termination of that contract at about 2 p.m. today (Friday),” he said. He did not elaborate on why the company cancelled the project.

Compounding matters, Macaluso noted that shortly after Porter Road LLC purchased Rasp Farm, the economy “went straight into the tank.”

But Macaluso believes the economy is starting to turn around. He said he received an inquiry from a group that is interested in building a medium-sized office building on the site.

To date, the only development is they built a retention pond on the east side of the property. They recently shuttered the only office building on the property. No taxable improvements to the property have been done.

John Drolet, former O’Fallon Ward 4 alderman

“I think in the long run it will be a good development,” he said. “But you just have to let businesses tell you what it’s going to look like. Just because I have a dream doesn’t make it right. I’m not a fortune teller. If nothing is happening anywhere, why would I be the guy to break that trend. Why would I be able to figure it out when nobody else has?”

The Illinois 158 Corridor TIF, commonly known as O’Fallon TIF No. 1, initially was created in 1995 and covered approximately 475 acres along Illinois 158-Scott Troy Road. This TIF district spurred the development of Williamsburg Center, a nine building office park; and Lakepointe Centre, an office park and retail/service center. The boundaries were modified slightly in April 2015 to remove about 47 acres of land from the district.

The TIF initially was approved in 1995. At the time, O’Fallon School District 203 threatened to file a lawsuit to stop it. In 2010, the city expanded the TIF boundaries to include Rasp Farm.

According to Mayor Gary Graham, the O’Fallon City Council felt it was in the best interest of the city to expand the TIF as the neighborhood around the Southview Plaza was experiencing flooding problems.

But since Porter Road LLC built the detention pond at Rasp Farm, the area’s flooding problems have been alleviated, he said.

“No one seems to remember that today, though,” Graham said. “But people on Dartmouth Drive had their yards underwater and houses had been flooding for 20 years (because) all that water from Interstate 64 was coming off onto that field.”

The TIF will expire in 2019.

TIF 1 disbursements to Porter Road LLC

▪  July 13, 2011: $1.5 million

▪  Feb. 3, 2014: $913,397.70

▪  April 21, 2014: $250,000

Source: O’Fallon Treasurer’s Office