Opinion

Towns too giving to developers

Posted June 28, 2008 11:00 pm

When are municipalities going to stop being financial institutions for developers? Every community needs to attract new developments but to give cash is not the correct approach.

The village of Gilberts is the latest victim of giving cash to a developer. Neumann Homes was required to acquire 20 acres for a new elementary school. Rather then using their line-of-credit, Neumann Homes "borrowed" $1.5 million from the village with repayment only from the impact fees on new home sales. Neumann Homes received free money, and with their complete bankruptcy and liquidation, the very beneficiary, the school district, must now repay the village.

Batavia has become a bank and a developer. The city acquired 2 East Wilson through eminent domain and completely refurbished the building. When the First Baptist Church wanted to sell the property, the city immediately purchased it so they could control the corner if Route 25 was ever going to be straightened. The Baptist Church is moving to Geneva, and Route 25 will not be straightened, so the city has two properties. Batavia, which has over a million dollars invested in these two properties, has hired consultants not only to try to market the buildings but also what type of business would best be suited for these buildings.

St. Charles is the biggest bank for developers. The city lost millions of dollars with the Frank/Johnson venture in the Hotel Baker. St. Charles gave these developers loans and grants, free money, before the Hotel Baker went into bankruptcy.

Now St. Charles is giving $7 million to Zylsta, LLC, the developer of the Harley-Davidson property, so Costco can build a new store on the property. The city is also rearranging the utilities on the property. The $7 million will be repaid with sales tax. The city will not receive the full value of Costco for up to 10 years. It is the sales tax that is repaying the city, so Zylstra, LLC and Costco have received free money.

Cities need to attract new projects for growth but the incentives must work both ways, not just in the developer favor.

Jack McCabe

Batavia

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