Des Plaines TIF report shows no activity anywhere

Posted2/11/2010 12:01 AM

Des Plaines city officials said Wednesday 2008 was a dull year for the city's five tax increment financing districts, with little or no redevelopment activity anywhere.

Officials shared this rather bleak picture at the annual meeting of the TIF Joint Review Board, which oversees the districts.


And although the report is a year behind, not much has changed with the TIF districts since, said Mike Conlan, Des Plaines director of community and economic development.

Tax increment financing captures increased property tax revenues from development within the district in a special fund used for redevelopment of that area.

The city's total outstanding TIF debt as of Jan. 1, 2009, was $45.9 million. After refinancing two taxing districts and paying off some of the bonds, the total debt dropped to $43.4 million as of Jan. 1, 2010.

At the close of the 2008 fiscal year, three of the five taxing districts - TIF Nos. 3, 5 and 6 - had a collective negative fund balance of $8 million.

City officials last October authorized a one-time money transfer from downtown TIF No. 1 to TIF No. 5 to eliminate a negative fund balance of $854,714 in 2008. TIF No. 5 is projected to have a negative fund balance for 11 years, but is beginning to show positive cash flow, officials said.

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With two hotel projects stalled by the economy, the city's TIF district No. 6 was expected to be $3.2 million in the red by 2012. City officials refinanced some of the original debt pushing to 2013 principal and interest payments due in 2009.

TIF No. 6 was created in 2001 to spur redevelopment in the area north and east of Mannheim and Higgins roads.

Des Plaines entered into a redevelopment agreement in 2007 with Oak Brook-based developer The Harp Group Inc. to build two hotels along Mannheim Road and Pratt Avenue north of I-90.

In 2008, the city signed a second redevelopment agreement to build two Hyatt hotels and two restaurants on property it owns along Mannheim just south of I-90.

The outlook for both projects is "disappointing," Conlan said.

"Neither of those two hotel projects are going to move forward at this time," he said.

Resident Dion Kendrick, who has spent 40 years in commercial real estate development, asked whether the city would consider dumping the hotels idea since the hospitality industry is struggling.


"Do we have a Plan B to sell these properties and get out from underneath this TIF?" Kendrick asked. "There are no hotels being built."

Conlan said the Hyatt group is still interested in developing the city-owned site of less than five acres, but there aren't many developers who have shown interest, he added.

The only taxing district doing relatively well in Des Plaines is the downtown TIF District No. 1, which had a surplus fund balance of $1.5 million at the end of 2008 and 2009. The money was redistributed to area taxing bodies.

"We do appreciate the surplus payment given our current financial situation," said Mary Kalou, assistant superintendent for business for Maine Township High School District 207, which is facing a $4 million to $9 million deficit in the 2010-2011 school year.

Yet, the downtown taxing district still has an outstanding debt of more than $23 million.

Kendrick asked why the city would not pay off more of that debt before refunding surplus monies to area taxing districts.

Conlan said the $3 million refund was per an intergovernmental agreement that later led to the establishment of TIF District No. 4.