Des Plaines plans to restructure special tax district
Des Plaines officials want to restructure a special taxing district that's long operated in the red, with an eye toward making the area more enticing for developers.
The city established its sixth tax increment financing district on the northeast corner of Higgins and Mannheim roads in 2001 in an effort to spur redevelopment. But a number of proposed projects have failed to get off the ground, while the city finds itself with an estimated $6.8 million deficit in the TIF 6 fund.
Mayor Matt Bogusz and City Manager Mike Bartholomew are proposing the existing TIF district -- a triangle-shaped piece roughly bordered by Higgins, Mannheim and Greco Avenue -- be reduced, with a portion being fully restored to the property tax rolls, and the balance restructured into a new, seventh TIF district.
When Des Plaines' city council established TIF 6 in 2001, the equalized assessed values of properties within the district were set as a baseline, and all property taxes generated above that were intended to go into a special fund controlled by the city -- money that could be reinvested back into public and private improvements.
Today, property values within the district are all below the established base, which has led to economic distress, Bartholomew said.
City officials want to take out three properties from TIF 6 south of Pratt Avenue and put them in a new TIF 7 that would set up lower baseline property values.
"Those properties have been bringing this whole thing down," Bartholomew said. "Now we'll reset the base value, and essentially start from scratch."
"The base value is so much lower because nothing's been constructed on those pieces of property," he said. "It's so low that no matter what you build, it will automatically create an increment to reinvest back in the properties."
Bartholomew said restructuring the TIF could mean projects that were planned and fell through may become viable again.
A proposal to build a seven-story parking garage, nine-story hotel and 4,000-square-foot fast-food restaurant on a 5-acre, city-owned property near Mannheim and Higgins fell through in 2012 after the developer backed out, citing high Cook County property taxes. An earlier proposal to build two Hyatt hotels, restaurants and shops was withdrawn in 2010. The city borrowed $10.4 million to buy the land -- formerly home to Ace car rental and a TraveLodge -- and for other redevelopment costs.
Just north of the city-owned land sits a vacant 4-acre parcel now owned by MB Financial Bank, which bought the land at auction for $4.5 million, Bartholomew said. An earlier proposal to build two Marriott hotels there fell through in 2010.
A third parcel, owned by the Rosemont Park District, sits east of a McDonald's restaurant. Bartholomew said park district officials have indicated they may sell it when Des Plaines officials find a developer for their 5-acre property in an effort to put together one larger development.
Properties that would remain in restructured TIF 6, due to expire in 2023, include Cafe la Cave, a car wash, Starbucks and Potbelly. TIF 7 -- which would include the properties owned by the city, park district, and bank -- could be in place for a maximum of 23 years.
What isn't included in any new or restructured TIF district is the McDonald's property at the corner of Higgins and Mannheim. Now within the boundaries of TIF 6, the restaurant would fully return to the tax rolls under the city's plan.
Bartholomew said that was an important part of securing support for the plan from Des Plaines Elementary District 62 and Maine Township High School District 207 officials. "There has to be something in it for them as well. We're all in this together," Bartholomew said.
Sixth Ward Alderman Mark Walsten, whose ward includes the TIF district, said the plan could make the vacant land more attractive to developers. "The longer the economy starts improving, the better chance something is going to come up," Walsten said.
Des Plaines' TIF 6 sits across the street from Rosemont's TIF 7, established in February. It includes the former Wyndham O'Hare Hotel, due to reopen this year as a Hyatt Place Hotel and separate "select service" hotel.
The city council is expected to discuss the proposal Monday and consider a resolution to begin the TIF restructuring process. A formal public hearing on the proposal could come as soon as September.