City, Unit 4 reach accord on tax districts

City, Unit 4 reach accord on tax districts

CHAMPAIGN – The city and school district have reached tentative agreement over special districts in downtown Champaign and on the south University of Illinois campus.

The agreement will clear the way for the school district to get more money and the land on the south campus to be developed.

"We think we've reached an agreement that will satisfy and protect the school district," said Veronica Gonzalez, a planner for the city.

"We're tying up the loose ends and hopefully, come Monday night, we'll have an agreement," said Scott Anderson, president of the Champaign school board.

The Champaign school board has scheduled a special meeting for Monday to consider the agreement, which would:

– Increase the school district's share, as well as other taxing district's share, of money generated in the downtown tax increment finance district.

– Begin paying the increased share this year rather than next year.

– Require the Unit 4 school district to give its unqualified support to proposed legislation, HB 3637, that would allow the creation of two special taxing districts to allow tax-generating development on the south campus land.

A tax-increment finance district keeps increases in property taxes, generated by improvements, in a fund that usually can be used only for further improvements or economic incentives in the district. The city, though, would reimburse some of the money from the downtown district to taxing bodies.

The agreement with Champaign would increase the tax districts' rebate of the 2004 increment from 30 percent to 40 percent. The total downtown increment this year is roughly $650,000, meaning 40 percent of that amount would be rebated to taxing bodies on a pro-rata basis based on their property tax rate. The school district would capture the majority of the rebate.

Champaign Planning Director Bruce Knight said the percentage of the rebate will be increased gradually over the next five years until the taxing districts are receiving 100 percent of the 2004 downtown increment. The district was created in the early 1980s and the taxing bodies have been receiving, up until this year, the same flat amount of property taxes that they received from downtown 23 years ago.

The Champaign City Council is expected to vote Oct. 4 to extend the life of the downtown tax increment financing district for another 12 years and to approve the agreed-upon payout schedule to other taxing bodies.

"The reason we're doing it that way is so we can retain some working capital in the TIF and the increment continues to grow" as additional development downtown takes place, Knight said. "We'll continue to have money to encourage reinvestment in the downtown area for the life of the TIF."

Champaign Mayor Jerry Schweighart said he's hopeful an agreement with the Champaign school board can approved, but he warily noted that both sides have been close before.

"If there is an agreement, I think it shows they (the school board) have the vision to bring a lot of business to that research park," he said. "This is the final piece we need."

If the proposed legislation is approved, possibly in the fall override session in November, Champaign and Urbana would establish side-by-side economic development areas in the south campus area. The cities' intent is to sign agreements under which the two areas would share property tax income and effectively function as one district.

The two districts are expected to cover, at a maximum, about 500 acres between Windsor Road on the south, Florida and Kirby avenues on the north, Race Street on the east and the Canadian National railroad tracks on the west.

New development in the south campus districts would be taxable, with the tax dollars going into a pool to help pay for infrastructure and incentives in the district, with some money also being rebated to taxing districts.

Already, plans are in the works to construct a new 120-room hotel, an adjacent restaurant and a 36,000-square-foot convention center on south St. Mary's Road, across from the UI's Assembly Hall.

Fox/Atkins Development would develop the hotel and restaurant, with groundbreaking possibly by this fall.

The adjacent $9 million convention center would be owned and developed by the UI, with the city of Champaign contributing $3 million toward the construction cost by rebating hotel/motel and property taxes to the university.

The research park will eventually expand to the south by more than 100 acres, all the way south to Windsor Road, Knight said.

The school district was the lone holdout in the spring in supporting the south campus development legislation when it was introduced in the General Assembly. That lack of unanimity among the affected governments killed the bill for the spring session. It may be brought to a vote in the fall veto session.

That holdout led to some public grumbling from city officials and state Sen Rick Winkel, R-Urbana, about the school district's lack of cooperation.

"I realize it seems like we were the big impediment, but ... there were a lot of potential issues we had to deal with," Anderson said.

"There've been a couple hang-ups and concerns," Gonzalez said, among them the school district's concern about the size of the district proposed for the south campus. Because the legislation must be usable statewide, the original proposal specified any land within 3 miles of the south campus could be included in the district, Gonzalez said.

The school district's lawyer pointed out the 3-mile issue as a red flag, Anderson said.

"Three miles would include most of the town," he said.

With that and other issues resolved, the school board will consider the matter at 5:30 p.m. Monday at the Mellon Building, 703 S. New St.

Meanwhile, the Champaign City Council will hold public hearings at 7 p.m. Tuesday to amend the city's enterprise zone by 43 acres to include new areas in the south research park, generally south of St. Mary's Road, east of First Street, north of Hazelwood Drive extended and west of Fourth Street extended.

Including this area in the enterprise zone will allow for abatement of some property taxes and sales taxes on construction materials.

A public hearing will also be held Tuesday on an annexation agreement between the city and UI to add the 43 acres to the city, and also to commit the city to contributing $3 million toward the convention center and the UI to building the center. Final votes on those issues will come Oct. 4.

The final agreements on tax sharing in the south campus area will involve the cities and school districts of Urbana and Champaign as well as the UI.