By Ted Schnell • BocaJump
Ultimately, it came down to creating jobs, revitalizing a part of Elgin’s downtown that otherwise would languish, and making money.
Those were the top reasons members of the City Council cited as they talked their way through a tough decision. In the end, the council unanimously agreed to give Artspace Projects Inc. another $250,000 in tax increment financing funds to complete its financing for an affordable development where artists and their families could live and work.
The vote did not come without some angst. The council already is anticipating a tough round of budget deliberations this fall in which a $4.5 million deficit figures prominently.
Initial questioning by Councilman Richard Dunne focused on the overall cost of the city’s involvement in the project, which would renovate the former Elgin Community College Fountain Square Campus, 51 Spring St., into apartments and business space for artists.
Colleen Lavery, the city’s chief financial officer, said the city’s investment was $1,007,500. Only $32,500 of the total involved general fund monies, which reflect costs associated with the city’s initial exploration of options for the site. The rest is TIF money, whose use is restricted to infrastructure and property improvements related to the district.
Questions also focused on the value of the property, which the city is giving to Artspace as a part of the deal.
The city received the Fountain Square Campus as part of a land swap in which it gave ECC a portion of its Spartan Meadows property. At the time of the swap in January 2010, each of the two properties was appraised at about the same value – $2.56 million. That brings the total value of the city’s investment to nearly $3.57 million.
But on Wednesday night, city officials disputed the appraisal as inflated – that covenants on the property would have restricted commercial uses of higher value that the appraisers considered when estimating their value for the land.
Further, city officials noted that Elgin originally spent only $7,500 to buy the portion of the Spartan Meadows property that was traded – meaning the city’s actual dollar investment in the Artspace project will total just $1,015,000.
Still, Artspace’s coming back for more funding just weeks away from the scheduled start of construction was troubling to Councilman John Prigge, who noted that the size of the request – $250,000 – is comparable to 14 percent of the city’s deficit.
City Manager Sean Stegall pointed out that TIF monies are not part of, nor can they be diverted for use in the city’s general fund.
Prigge admitted he was struggling with the idea of doling out another $250,000 to Artspace, saying he has supported the vision for the project since it first was presented to him by former Mayor Ed Schock. But with the expense continuing to mount at a time when the city is facing a significant budget deficit, he noted: “If this did not go through, this would not be the first city to stop a project because of the economy.”
Artspace has indicated the entire project hinges on the additional funding from the city.
But other council members pointed out that economic conditions should be the impetus for continuing the project, not stopping it.
In response to questions from Dunne, John Shales of Shales-McNutt Construction, which is involved in the project, pointed out that construction alone is expected to generate 171 jobs at a time when unemployment rates are still high.
Councilman Robert Gilliam noted that the city’s rejection of the request for $250,000 effectively would kill the project – and end any opportunity for improving the property.
“If we do not go through with this, we’re talking about a development that will not happen,” Gilliam said, adding that could lead to the property becoming an eyesore in a prominent area of the downtown.
“No one is going to come in to do this at this time, when the economy is what it is,” Gilliam said, adding that, like Prigge, he is not fond of increasing the city’s investment in the project. “But we need to do this.”
Councilman John Steffen also joined the discussion, noting that the city will end up reaping a 30 percent return on its investment in the project – meaning the increase in property value over the life of the TIF will bring in much more tax revenue than the city is investing now.
That, Steffen continued, does not include the “soft return” return on the city’s investment: A nice-looking property, more downtown tenants – commercial and residential – who will have a positive impact on other downtown businesses, among other benefits.
Councilwoman Anna Moeller also noted the project represents the heart of what a TIF is about – revitalizing a troubled area.
Mayor David Kaptain said he has been meeting with members of the area’s trade unions, which have been hard-hit by the nation’s economic troubles. Kaptain said the trade unions stand to see the greatest immediate benefit – work – from the project, and he pointed out that the jobless rate among trade unions is the area’s highest of all the groups.
Ultimately, those appeared to be enough reasons to approve the final piece of funding for the project.
The council voted 7-0 for the proposal.
