Tax Tactics for Brownfields

TAX INCREMENT FINANCING Brownfields 2004 September 21, 2004 presented by: Lisa Lyon URS Corporation Chicago, IL

Tax Tactics for Brownfields

 TIF basics and more  TIF brownfield provisions  Case study: US Route 20 TIF, Elgin Illinois

WHAT IS TIF?

Multi-year financing, planning & development tool Revitalize/redevelop blighted and declining areas Does not institute a new tax rate Municipalities facilitate private investment New private investment enhances property valuation Tax revenues on increased valuation= INCREMENT Increment is a captured pool of funds for TIF district

TIFs in the US

Tax Increment Financing is enabled by state statute —not federal law California adopted first TIF law in 1952 Most state TIF laws enacted in 1970s/1980s 48 states have a TIF law

Common TIF Statute Provisions

TIF initiation process Eligibility requirements Needs assessment and “but for” Redevelopment plan components Public process/notice Financing and feasibility Monitoring and reporting Timelines

Brownfields and TIF

Brownfields support or establish eligibility (illegal disposal sites, presence or threat of release of hazardous substances, etc.) Industrial site redevelopment often associated with job recovery/retention goals of TIF law Environmental remediation costs substantiate the “but for” case Public purpose for brownfield areas are typically evident to TIF opponents

Not all Brownfield TIFS Created the Same!

For example, in Illinois, brownfield conditions support eligibility of a variety of TIF approaches: Improved blighted area Vacant blighted area Conservation area Industrial park conservation area Industrial jobs recovery area

A Brownfield Case Study: Elgin, IL

State mental health facility 7,000 patients at peak in 1950s-- currently 400 patients Surplus 90 acres of a 200-acre site 19 buildings dating from as early as late 1800s foundations and remnants of 18 buildings

Environmental Conditions

Asbestos Underground storage tanks Boiler, oil and coal storage areas Historical on-site power generation/dynamos Historical use of “disinfecting house” Numerous drum containers and AST PCB containing abandoned transformer

TIF Redevelopment Opportunity

Sanfilippo and Son nut producer seeking a new office and plant headquarters Consolidate operations of 3 locations in IL Retain 1,000 jobs in northeast Illinois 1,060,000 s.f. state of the art facility Increase processing/warehousing by 40%

US ROUTE 20 TIF Strategies

TIF conservation and blighted area Incentives required for acquisition, environmental remediation and demolition 90-acre Sanfilippo site an engine for adjacent vacant and industrial area (440+ acres) Coordinated and comprehensive infrastructure improvements to stimulate private investment in overall area

Existing Land Use

Sanfilippo Deal

City of Elgin acquisition from state: $4m City of Elgin demolition & remediation: $5m Sanfilippo Facility: $85m $26.5 million in property taxes over TIF term

TIF REDEVELOPMENT ACTIVITIES

Assemble land into parcels of sufficient size and shape for sale and redevelopment Public infrastructure improvements Incentives for key private development projects Rehabilitation of existing buildings Site preparation and environmental remediation Improvements to community facilities and amenities

US ROUTE 20 TIF BENEFITS

Property value today: $4.6M

Estimated value in 2027: $24M —available to all taxing districts 1,000 jobs retained in Illinois $9:$1 private to public investment Potential for targeted job training with TIF funds Coordinated approach to redevelopment and revitalization of key industrial and employment area of the community