O’Fallon city administrator says the city’s TIF payments to Rasp Farm were warranted

An O’Fallon city official said the $2.66 million in Tax Increment Financing money the city gave to a local developer were warranted.

City Administrator Walter Denton said since the Rasp Farm TIF project was approved by the O’Fallon City Council in 2010, Porter Road LLC has used the TIF money to make needed drainage improvements on the 52-acre site.

“As a direct result, there have been no major flooding problems in Southview Gardens or around Laverne Evans School,” Denton said

O’Fallon will pay Porter LLC an additional $743,462.65 with TIF money once the vacant strip shopping center in the 1400 block of Lincoln Ave. is razed, Denton said.

Before 2010, flooding was a big problem in Southview Gardens, and the source was water coming off of Interstate 64 and through the Rasp Farm property, which is located in the 1400 block of Lincoln Avenue in O’Fallon.

At one time, this portion of Rasp Farm was located within the boundaries of the Village of Shiloh.

But it was annexed into O’Fallon after Shiloh and O’Fallon made a land swap several years ago.

While Rasp Farm was in Shiloh’s village limits, a developer was then proposing to build apartment buildings on the property.

But Southview Gardens residents did not want the apartments, Denton said.

“And the City of O’Fallon had neither the jurisdiction to stop the apartments nor the money to fix the flooding problems,” he said.

However, after O’Fallon annexed Rasp Farm into its city limits, O’Fallon still could not afford to fix the property’s flooding problems.

“So, we investigated creative solutions,” Denton said.

It turned out there was a TIF District nearby that had already completed all of its infrastructure improvements. The TIF, more commonly referred to as TIF No. 1, still had eight years left of its 23-year life span.

In 2010, the O’Fallon City Council agreed to extend its original TIF boundaries to Rasp Farm, so that the flooding could be fixed without raising city-wide property taxes and without creating a new TIF in O’Fallon.

“This way, the Rasp Farm TIF would only be in effect for eight years rather than the 23 years possible in the state TIF law and the other taxing bodies (such as school districts) would receive the full effect of the property taxes sooner,” Denton said.

The original TIF started in 1996 and encompassed an area that included MotoMart at U.S. Highway 50 and Troy-Scott road.

Denton has Porter Road LLC has been reimbursed around $1 million for drainage improvements, infrastructure and property acquisition.

“Some people are critical about using TIF funds for land purchase, but it is allowed in the state TIF law and was approved by the city council in the TIF Plan,” Denton said.

Denton said Porter LLC used another $1.6 million to make “necessary infrastructure improvements” and build two detention ponds at Rasp Farm. Porter Road LLC will eventually deed the detention ponds to the city, he said.

Porter Road LLC has also installed several fire hydrants on the property.

Denton called it “unfortunate” that Porter Road’s LLC has yet to develop the property. But he noted that Porter LLC has not received a TIF payment from the city for over two years since Porter Road LLC has stopped working on Rasp Farm.

However, Porter Road LLC partner Steve Macaluso said his company plans to raze the old Schmitt Music store and install a turn lane, with turn lights and begin building the intersection at Rasp Farm and Lincoln Avenue in June.

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.

Former O’Fallon Alderman Rick Reckamp said 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.

Reckamp said he was adamantly opposed to Porter Road LLC’s concept, then and still today, since there’s going to only be one way in and out of Rasp Farm.

“This is bad development period, especially with the coming of a new hospital, and that is going to create tremendous problems on Lincoln Avenue, which is only a two-lane, narrow road,” Reckamp said.

Memorial Hospital East is expected to open in April, less than a quarter mile from the entrance to the site.

Macaluso said up until the last few weeks, 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.

Compounding matters, Macaluso said 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 recently received an inquiry from a group that is interested in building a medium-sized office building on the site.

This story was originally published March 17, 2016 at 2:00 AM with the headline "O’Fallon city administrator says the city’s TIF payments to Rasp Farm were warranted."