Wheaton council split on sales tax hike for downtown streetscape project

A $35 million plan to transform public spaces in downtown Wheaton could get most of its funding from two special taxing districts, one of which is set to expire in five years.

But city council members are at odds over how to pay for other improvements that don't fall within the boundaries of the two tax increment financing districts.

City staffers on Monday unveiled their initial funding proposal for the streetscape and infrastructure project intended to make the downtown a thriving destination. The council has yet to finalize a scope, but the plan could tap the following revenue sources:

• An estimated $23.1 million from one TIF district.

• $600,000 from a second TIF.

• $3.1 million from the city's capital projects fund reserve.

• A $7.9 million loan from the city's general fund.

• A 0.25 percent home-rule sales tax increase that would generate $875,000 a year for interest and principal payments on that loan

But several city council members took issue with raising the current 1 percent local sales tax, while others say they wanted more input from businesses. To begin collecting revenue from the sales tax increase next July, the council would have to approve an ordinance before April 1.

"I think we should try very hard to do this without increasing the sales tax," Councilman Phil Suess said. "We're spending a lot of money basically to increase the attraction and the features of downtown and ... if we couple that with a sales tax increase, we're kind of undercutting what we're trying to do."

The city has tentatively divided the streetscape project into four phases with plans for new gathering spaces, signs, landscaping, wider sidewalks and reconstructed streets.

Crews broke ground last month to replace water main and sanitary sewers under a stretch of Front Street, ushering in the first phase of the larger-scale effort.

The city could begin improving the streetscape along Front, from West to Cross streets, in spring 2018.

Best-case scenario, officials say, the TIF funds could provide roughly $23.6 million, or about 68 percent of the project cost. Those projections depend on several variables, including the outcome of a property assessment appeal on the Wheaton 121 luxury apartment complex at Cross and Front streets.

In a TIF district, the assessed value of land is frozen for the purpose of calculating how much property tax dollars local governments receive. As property values increase, the difference between what the governments collect and the higher taxes the land generates is put into a fund that helps pay for certain improvements within the TIF district, such as roads and other infrastructure, for up to 23 years.

City officials proposed the general fund loan for projects along street segments outside the TIF districts. City Manager Mike Dzugan said the project likely still could be done without additional revenue by using capital project reserves. But he expressed caution about that approach.

"We are not going to be able to address some of the other capital project needs that we have in this city, and I think the additional revenue allows some flexibility to look at that," Dzugan told the council. "We've got a lot of challenges ahead of us to try to make this work, but without the additional revenue, it just makes it that much tougher."

Councilman Michael Barbier is not sure how to pay for the plan.

"I would like to see more drawings, what exactly we're providing for the citizens, because this is a lot of money that could be used in a variety of other areas," he said. "If the benefits to costs is not there, I don't see a justification of any tax increases or even some of the funding that we have going into it."

Councilman Todd Scalzo supported the tax increase.

"It's a 'use tax' and is picked up by a lot of nonresidents, which I think benefits us," he said. "I think it's a responsible way to fund this."

Scalzo also urged the council to make "tough decisions" after years of planning.

"I think staff has done a great job over the years of keeping us on task, and I think we've generally done a good job as a council moving the ball forward, but again I want to see us get this over the goal line and that requires us making the decisions at the end of the day," he said.

  Pavement stamped to look like cobblestone along Front Street will likely be replaced as part of the streetscape project. Daniel White/, March 2017
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