Northbrook Court qualifies for TIF district, consultant says
A consultant's report says the Northbrook Court redevelopment project area would qualify for a tax increment financing district.
Michio Murakishi, a Chicago consultant tasked by the Northbrook village board to conduct a feasibility study for a potential TIF district, recently submitted his report to the village.
He said based on the main qualification of being a "blighted area," the shopping center at 1515 Lake-Cook Road is eligible for its 105 acres to be designated as a TIF. That includes the vacant 18 acres of the former Macy's space, designated a TIF district in 2019.
"We're looking forward to the public conversation about the establishment of a new TIF district at Northbrook Court to support this important redevelopment proposal," Northbrook Village Manager Cara Pavlicek said.
Mall owner Brookfield Properties plans a multiple-phase, mixed-use development spanning 10 years.
Murakishi identified six factors where Northbrook Court falls behind: obsolescence, deterioration, excessive vacancies, inadequate utilities, lack of community planning, and declining equalized assessed value.
He found Northbrook Court's store vacancy has increased from 10% in 2018 to 20% in 2022. He cited real estate data indicating regional malls have an average 8.7% vacancy rate, with anything below 10% being "healthy."
Using six years of data through 2021, the mall met the standards for total decline in EAV and an EAV growth rate less than the consumer price index for three of the past five years.
Two of those periods, 2019-20 and 2020-21, were during the height of the COVID-19 pandemic. The EAV for the project area fell 16% in 2019-20, and fell 11% in 2020-21.
Murakishi said the EAV for the project area in 2021 was around $72 million. If a TIF were adopted this year, by its 2047 expiration he anticipated the EAV would be $414 million.
A redevelopment plan also is required for TIF qualification, including an itemized list of estimated redevelopment costs. That figure is $155 million.
The costs of the seven TIF-eligible categories in 2023 dollars range from $5 million for interest and professional services, to $50 million for public improvements.
The total cost may be adjusted up to 5% without any amendments needed to the plan, Murakishi noted in the report.
That $155 million, however, is not the portion designated for assistance by the TIF. Brookfield Properties identified a $90 million gap between what it could fund and its $750 million investment.
The TIF is one of three mechanisms used to bridge the gap to redevelop Northbrook Court. Future growth in existing sales tax dollars will be shared between the village and the developer, and a new proposed 1% sales tax from a business district, yet to be finalized, will go to Brookfield.
"The data bears it out. It's in declining condition," Pavlicek said. "And without a public-private partnership I don't know that there would be the necessary reinvestment for it to become what it should be for the next 50 years."