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Tax Increment Financing (TIF) District #4 was created by the Des Plaines City Council in Fall 2006.
Five Corners Redevelopment Plan General FAQ'sWhat is the size of the 5 Corners TIF and where is it located? The size of the TIF is approximately 70 acres and its Equalized Assessed Value is $42.3 million. It is located just north of Metropolitan Square and includes part of Golf Road, River Road and Rand Road. Why does the City need to use TIF? Why not let the private sector develop 5 Corners without TIF incentives? TIF allows cities to control development in an area rather than allow spotty, unmanaged development. Metropolitan Square and the Wille Road industrial park would not have developed the way they have without TIF. In Illinois, there is no other economic development tool that gives cities the measure of control that TIFs do. What revenue are School District #62, School District #207, and the Des Plaines Park District receiving from the City in the intergovernmental agreement related to the TIF District? The agreement provides for the City to declare a surplus of $3,000,000 in funds from TIF District #1 to be shared with the three Districts as follows: $1,500,000 payable in 2008 and $1,500,000 payable in 2009. The City also agreed to share 10% of the property tax revenues beginning in the 11th year of the Five Corners TIF and 20% of the property tax revenues beginning in the 21st year of the TIF. Finally, the City will share 8% of its share of the sales tax revenues from the new businesses established in the 5 Corners TIF. The City also agreed to remove a number of properties from the proposed 5 Corners TIF District and reduced the size of the original proposed TIF district by approximately 20 acres. The City has projected that the park district and school districts #62 and #207 will receive an additional $12-15MM over the life of the TIF from the agreement. They will also receive all of the money that they are currently receiving from residents and businesses in the TIF. If the TIF is successful, the City could also return additional dollars to the other taxing bodies during the life of the TIF. Also, at the end of the TIF, the other taxing bodies are projected to have their tax base increase to $160MM in equalized assessed value (EAV). How does a TIF impact homeowners? Homeowners benefit from the TIF district in several ways. Residential property values are generally improved, due to new commercial development within a short driving time from a residential neighborhood. Increased business activity could lessen the amount of residential property taxes required to provide for essential services – police and fire protection, public safety, public works – that add to the quality of life in the City. Additional retailers are available to residents in their own town due to some TIF districts, which allows those residents to “shop their town”. Finally, TIF creates additional jobs in the community, which allows residents a greater opportunity to work closer to their home, rather than commuting long distances. What does the City mean by saying that the Five Corners TIF District will be “marketdriven”? In the other City TIF districts, the City has purchased properties through condemnation and has redeveloped them through public-private partnerships. In the case of the Five Corners area, the plan is to work with developers who have made serious efforts to work with property owners concerning sale of parcels for redevelopment. If the developer makes a convincing case to the City that their project will significantly raise our quality of life and revenue base, the City will enter into a partnership with the developer for purchase and reuse of the parcels involved in the project. The City cannot use eminent domain without specific authorization from the City Council and must follow all state laws governing eminent domain. What does “retail leakage” mean? “Retail leakage” means the unmet demand for retail in Des Plaines. About $58 million in retail spending is made by Des Plaines residents, commuters, and employees of Des Plaines businesses outside of Des Plaines that could be spent in town with additional retail according to a recent study commissioned by the City. This costs the City almost $3 million in property and sales tax dollars every year. The study shows electronics, home improvement, pet supply, books, office supply, crafts and housewares and home furnishings are potential retail development opportunities in Des Plaines. Do TIF districts increase property taxes? On the contrary, one of the reasons that cities undertake TIFs is to increase the tax base, which reduces property taxes. The higher the tax base, the less each taxpayer pays. Not surprisingly, the tax base climbed significantly in the City of Des Plaines over the last 5-6 years – about the same time three of the four City’s TIF districts were established. A key factor for looking at property taxes is the tax rates for individual districts. Three of the four TIF districts in the City were established in 2001 and 2002. The overall tax rate for residents in Elk Grove Township was reduced from 7.873 in the tax year 2000 to 6.176 in the tax year 2004. For Maine Township residents, it was reduced from 8.074 in the year 2000 to 7.110 in the year 2004. The City’s tax rate, the park district’s tax rate, and the school districts’ tax rates have declined during that time period. Why is the City looking at creating another TIF district when several other TIF districts have not yet been completed? The Five Corners area has been identified as a priority for redevelopment in recent years by the City Council, most recently in the City’s Strategic Plan and Comprehensive Plan Update. Due to the modest level of redevelopment in the area, the City cannot wait until other TIF districts conclude to provide the infrastructure necessary to “jumpstart” redevelopment and beautify the Five Corners area. The sooner the City starts the TIF, the quicker it can increase its tax base and bring new retail opportunities and jobs to Des Plaines. The City’s current three TIFs are seeing much success. The City’s Wille Road TIF #3 has attracted several new industrial businesses, including Caterpillar Logistics, Bombardier, and Hellman. TIF #6 on Mannheim Road has attracted Starbucks, Potbelly, and the City is currently reviewing plans for four major new hotels. TIF #1 has brought Metropolitan Square and businesses such as Cheeseburger in Paradise and Shop ‘n’ Save. There has been much false and misleading information distributed about the health of the City’s current TIFs. It is not unusual for TIFs to take a number of years before significant revenue is generated. No revenue from the City’s general fund has been used to fund any of the City’s TIFs. The City’s financial consultants are projecting that overall, the City’s three current TIFs will have a positive balance of $64 million at the end of the TIFs. We have also been asked why the City would consider starting this new TIF before Metro Square was completed. TIFs can take a number of years before they are fully completed. Metro Square itself will take years to complete and it can be expected that 5 Corners will take a significant amount of time as well. The City will try to attract larger-format retailers in 5 Corners, but Metro Square focuses more on smaller, downtown-type users. Why hasn’t the City cleaned up the 5 Corners Area previously? The City has a very aggressive code enforcement program in areas in 5 Corners and other areas of the City that are not in compliance with city codes. Since 1997, 376 complaints have been filed for various code enforcement violations in the 5 Corners area. Is the City looking for other locations for the businesses that may be relocated by the redevelopment in TIF District #4? The City updates a Sites Available Inventory on its website that features space for sale and industrial/warehouse, office, and retail space for lease. The City uses the inventory to help retain existing companies and attract new businesses to Des Plaines. As properties are bought for redevelopment, the City will use the inventory as a guide for relocating business relocated from the Five Corners area. City staff is also paying close attention to changes to the O’Hare office and industrial market, and how those changes may affect available space in the City for relocated business from the Five Corners area. What are the City’s next steps if the TIF district is approved? The City’s next steps are to prioritize which portions of the Five Corners area should be redeveloped initially, then target those areas for marketing to developers, realtors, and retailers. We then will determine financing methods to provide the capital for redevelopment projects. Redevelopment FAQ'sWhy is this area being considered for retail? Preliminary analysis performed by the City’s consultants indicates that various types of retail could be successful in the Five Corners area, based upon location, traffic counts, vehicular access and visibility, trade area population and purchasing power trends, absence of similar stores in the area, and the presence of aging retailers in neighboring communities. What stores will locate in Five Corners? The presence of new retailers in Five Corners depends upon the market. Currently, developers that City officials and staff have met recently indicate that "big box supercenters," comprising approximately 150,000-175,000 square feet, view Des Plaines as a possible market, since the leading stores in that category have no land in neighboring communities in which to expand. There are smaller national retailers and restaurants that commonly locate with such "big box supercenters." These tenants would be most likely to co-locate in such a redevelopment. How will the new retail in the area compete with Randhurst Mall, Golf Mill Shopping Center, and Metropolitan Square? The retail that locates in Five Corners will compete with stores in surrounding communities based upon several factors, including a particular retailer or restaurant’s size, type of retail, "synergy" of the retailers in Five Corners (retailers targeting certain consumers tend to cluster around each other), age, amenities, incentives, etc. The City’s consultants believe that many of the retailers likely to locate in the Five Corners area will be different than those of Metropolitan Square – including larger stores requiring better visibility, serving a larger trade area. How does the current real estate downturn affect potential retail redevelopment? There are no indications from national or regional economists that the current commercial real estate market will continue downward long-term. However, according to recent reports, national commercial developers are designing "power centers" (centers that feature one or more "big box" stores, or anchored by a supermarket and a single "big-box") with less in-line commercial space to be filled by independent local or regional stores, since vacancies for those types of retailers are on the rise. The City plans on attracting more "big box" retailers to Des Plaines, especially since there are very few of these types of stories within the City currently. After the Five Corners redevelopment plan is completed, the current commercial real estate market may look different. The City wants to be prepared to capture potential development. How will auto-oriented design aspects and design aspects promoting pedestrian access be balanced in the area’s development? The balance depends upon the location of the development. A power center at the intersection of Golf and River Roads would need to be oriented more for motor vehicle access, while possessing design elements that promote pedestrian access. Commercial or mixed-use redevelopment adjacent to downtown Des Plaines would need to integrate sidewalks, crosswalks, bicycle racks, and other streetscape elements that encourage residents and commuters to walk to dining establishments, stores, medical offices, etc. How will traffic issues be addressed? The consultant team for the redevelopment plan includes a traffic/engineering firm, Gewalt Hamilton, with decades of experience in Chicagoland dealing with a variety of traffic concerns, ranging from locating traffic signals and curb cuts to encouraging pedestrian access. The City will work with the Illinois Department of Transportation, the Illinois Commerce Commission, and other relevant stakeholders to ensure that vehicular and pedestrian safety is paramount in the redevelopment project. What will we do about the trains? Can we afford a grade separation? As mentioned above, Gewalt Hamilton is part of the consultant team, and is charged with studying how best to segregate the train tracks from redevelopment. Another of Gewalt Hamilton’s tasks is to determine the cost of a grade separation for the railroad tracks and the area’s major commercial roadways. S.B. Friedman & Company, another member of the consultant team, will conduct financial analyses to determine the capacity of the TIF district to pay for a grade separation. The City supports the grade separation if affordable, since it will drastically improve traffic flow, access, and travel times. What will the City do with existing business and property owners? The City will work with property and business owners and may acquire land, help companies relocate, and/or take other steps to facilitate this redevelopment, depending on the location, type, and scale of the redevelopment in the TIF district. Was local business owner input solicited? A survey was distributed to over thirty business owners in subarea #5 (north of Rand Road, west of Des Plaines River Road) earlier this year. We received responses from five companies and incorporated those comments into the planning process. When will development happen? In all likelihood, development on site is at least a year-and-a-half away, and will depend on several market and infrastructure factors, including cost of land, the amount of land a developer can assemble, the extent of environmental cleanup required, and whether a railroad grade separation is possible so as to facilitate commercial redevelopment.
If you have additional questions, please contact the City’s Community and Economic Development department at 847-391-5306.
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