SAVANNA – The newly formed Savanna City Council TIF Committee met April 10 at City Hall. Attending the meeting were Bill Robinson, Mayor Peg Haffey, Jim Friedenbach, Pat Sanchez, and Community Funding and Planning Services’ Sharon Pepin. Roger Husband, who will be sworn in as Ward Four alderman later this month, also attended.
Robinson was appointed chairman of committee.
Pepin provided an overview of the TIF application and qualification process, and presented a detailed series of documents.
The committee elected to use Kathy Orr, a municipal and TIF attorney from the Chicago area, to oversee the legal aspects of the TIF district.
The documents indicated that the following expenses are eligible for reimbursement: administration of a TIF redevelopment project, property acquisition, rehabbing or renovating an existing public or private building, construction of public works or improvements, job training, relocation, financing costs, studies, surveys and plans, marketing sites within the TIF, professional services, and demolition and site preparation.
These items are reimbursable only if the TIF application has been submitted before the project has begun. If the business ceases operation, the agreement is rendered null and void.
The city’s TIF fund amount is measured by cumulative EAV, or the amount that the Earned Assessed Value for a city goes up from its base year (in this case, 2015). The TIF amount will never be less than the base EAV, Pepin said. She said that with Savanna’s property values so low, it’s likely there will be an inflationary trend on all properties, given activity in the community and surrounding areas.
Robinson explained that the city should have some funding to start the new TIF with, thanks to the “old” TIF district, which will be active for a few more years.
“We should have about $150,000 in the pot to start with, …so we got a little bit of money sitting in a TIF pot that we can start doing things with. …We don’t have to wait a few years to get something coming.”
The TIF payments are made over a period of years, decided upon by the committee and ultimately needing the approval of the council. The logic here is to help provide an incentive for the business in question to stay in town, knowing if it does so it will receive its money.
A formal request letter must be approved by the council before the business owner can proceed with projects.
Next, an inducement resolution is activated, whereby the council will consider the project but will require more specific information before approving the allocation of TIF funds. If approved, all project actions taken after approval are eligible for reimbursement.
Next, the applicant will submit a formal TIF application form, which will provide all the relevant information required by the committee about the project and its scope and expenses.
The committee will then compose and consider a TIF evaluation form on the property which will help inform its decision on how and if it will administer the funds. Then a detailed agreement between the city and the developer will be drawn up for final approval. This agreement then requires council approval.
Applicants will be required to submit receipts as proof of expenses after project completion to receive payments. Reimbursements will be based on the amount of actual work, though the initial amounts may be estimates.
Equipment costs are not eligible for reimbursement, but they are figured into the total project costs. Whatever money is given to an applicant cannot be more than what is considered “eligible” costs.
Pepin said a “general rule of thumb” as to the percentage of the project reimbursed, according to Orr, is 25 percent. But the percentage is at the discretion of the committee and could vary, depending upon individual circumstances.
“A lot of factors that can go into it,” Haffey said. “It’s never going to the same, probably, twice. I would guess that every one would be a unique case.”
Payout schedule is also variable; it could be as a set amount of money over a certain time frame, or as a percent of the increment from the property over a time frame.
The committee reviewed the application letter of Riverside Dental, LLC, at 401 Main St., and recommended approval of an agreement reimbursing the business $4,143.00 over 7 years; 20 percent of the total project costs of $145,000. The agreement will be reviewed by the full council at its April 25 meeting.