1702-sherman

City officials Wednesday will consider making a $165,000 gift to the Music Institute of Chicago as a “thank you” for the institute’s decision to move its headquarters to Evanston from Wilmette.

The proposal, up for review by the Economic Development Committee, would cover about 20 percent of the cost of planned renovations to the 10,000-square-foot space the institute has leased in the basement of the former Marshall Fields building at 1702 Sherman Ave.


Update 9:35 a.m. 3/27/13: We’ve just been advised that tonight’s Economic Development meeting has been cancelled because of lack of a quorum as a result of committee members being out of town during spring break week at local schools. The committee is now scheduled to hold its next meeting at 7:30 p.m. on Wednesday, April 24.


The money would come from the city’s Washington National Tax Increment Financing District fund. It’s structured as a no-interest, forgivable loan. Ten percent of the loan’s balance would be forgiven for each year the institute continues to occupy the building, for which it has signed a 10-year lease.

Top: The entrance to 1702 Sherman Ave. Above: A design by MIC’s architect for the renovation of the leased space.

The Music Institute will maintain its Evanston operations in the former First Church of Christ Scientist building at 1490 Chicago Ave. after the move, but it plans to close its facility on Dempster Street on Evanston’s west side as well as its current office in Wilmette.

Benefits

Memos from city staff and the Music Institute outline a variety of anticipated benefits to the city from the move. In Evanston Now’s analysis, these add up to the following benefits to the city over 10 years:

  • $21,466 in estimated sales tax revenue from 16 full-time-equivalent workers relocating to Evanston from Wilmette. This is based on an average $129 per week spent on restaurant meals and goods and services near their workplace by office workers surveyed by the International Council of Shopping Centers and the 2 percent city share of sales tax.
  • $26,000 in estimated sales tax revenue from MIC visitors. This is based on the city staff’s assumption of $10 per visit in ancillary purchases, MIC’s estimate of 500 visitors per week, the 2 percent city share of sales tax and an assumption that roughly half of visits previously occurred on Dempster Street in Evanston and half in Wilmette.
  • $19,680 in estimated sales tax revenue on ancillary spending by audiences at the planned black-box theater. This is based on the 4,000 midpoint of MIC estimates of annual theater visits, $24.60 estimated average nonprofit arts attendee ancillary spending from an Americans for the Arts survey and the 2 percent city share of sales tax.
  • $9,461 in estimated city liquor tax revenue. This is based on 4,000 theater visits, an estimated $13.14 average meals spending per visitor from the Americans for the Arts survey and a city estimate that 30 percent of restaurant sales is subject to the city’s 6 percent liquor tax.

These add up to $76,607.

In addition:

  • MIC plans to lease 25 parking spaces in a city-owned garage at a total cost over 10 years of $150,000. These are spaces that might, or might not, find other paying customers.
  • The MIC move converts a long-vacant space downtown to a productive use.
  • With the deal, city officials will be able to claim part of the credit for bringing a new theater space to downtown Evanston.

Costs

The costs to the city of the arrangement include the $165,000 gift itself, plus the income the city might have earned from that money over time, if it had been put to another use.

It’s difficult to determine the most appropriate rate of return for the funds, but as one reference point, the city is assuming that it will earn 7 percent per year on money invested in its fire and police pension funds. At 7 percent, $165,000 would roughly double over 10 years.

The Economic Development Committee, and ultimately the City Council, will have to determine whether the gift to MIC is a good deal for taxpayers.

Related story

Music Institute expands in downtown Evanston (Dec. 5, 2012)

Related documents

Office-Worker Retail Spending in a Digital Age, International Council of Shopping Centers, 2012 (.pdf)

Arts and Economic Prosperity IV, Americans for the Arts, 2012

Economic Development Committee packet, (March 27, 2013) (.pdf)

Bill Smith is the editor and publisher of Evanston Now.

Join the Conversation

11 Comments

  1. Another gift?

    This reminds me of when the Council gave $10,000 AFTER Borders had already decided to move to Maple.

    Why all these gifts—and esp. after the action that a group already decided to make and I assume for their benefit.  Let the Council members make a gift out of their personal checking account–not the taxpayer's wallet.

  2. Music Institute gift

    I had a business in Evanston that I capitalized with my own money.  The City Council allowed the landlord and a neighbor shop to destroy my business without turning a hand to help me.   It must be fun to sit on the council and play Monopoly  with taxpayer money.

  3. More bogus numbers by city staff?

    Employees of a non-profit spending $129 a week in Evanston?  These are bogus numbers, let face it staff will do anything to justify wasting our money.  That $500 a month, employees making $20,000 or $30,000 on going to be spending eating and shopping in Evanston.  I don't think so.

    This numbers are again as screwed up as the Lit Theater which went from $600,000 to 1.7 million dollars. Or the Peckish one were the numbers for the finanical did not even add up, off by $200,000.

    If we give this group $165K how about they give us free rent for some of their theater space for city programs?

    Anyone whose children were in the city of Evanston programs knows the city does not have adequate space for its children theather.  The city is not likely to ever be able to build anything given their track record. 

  4. Where’s my gift?

    I've lived in Evanston more than 10 years too-

    I've paid about the same in property tax overall as the sales tax as MIC has paid.

    If you add up all the times I've eaten out, shopped, etc. in Evanston, I"m sure the city has collected over $9,000 in additional taxes from me.   Geez, parking fees and tickets alone probably add up to what MIC has paid in liquor fees!

    Like MIc, I also bring in people to Evanston. I've hosted numerous relatives and guests, introducing many to the fine Evanston shops- many of whom continue returning to our town and spending money- 

    If I renovate my bathroom and add on an additional bedroom with the money  think of how much money the city can collect in additional revenue when I go to sell my house with the increased value! A bit of facade improvement money to plant some flowers- think of the how it will impact the sales of homes around me if my home looks prettier!  More tax revenue all around!

      I'll even throw in my parking spaces for a small fee-  Two spaces that otherwise might not have paying customers.  Cha-ching, who can hear the tax revenue rolling in!

    Where can I apply for my grant?    It's a win win all around people! 

     

     

  5. Gifts

    I am thrilled that the Music Institute is locating downtown, but this 165K giveaway loan, after they have already committed to their space, has nothing to do with the definition of creating economic development.  The Institute made their decision, signed their lease, and I will bet they have the ability and financing to build out their own space.

    I have always been supportive of economic development spending by the city, spending that guarantees projects get built,  spending when there is a potential for returns that with time will far exceed the city's initial investments.  But this is after the fact, so this ain't that.  

    If the Institute is so poorly managed that they suddenly need the 165K, and I don't think they are poorly managed, then at best a low or no interest collatoralized loan to be paid back in full over 10 years maybe, possibly, might be justified. 

    If the city wants to make a 165K "gift" to someone, make it towards an advertising campaign or some other thing that will benefit all the business owners who have made investments and created jobs in Evanston. 

    P.S. I assume they operate as a not for profit, will they be paying property taxes or does their space come off the rolls and onto everyone elses tax bill?

  6. Early April Fool’s Joke ?

    This has to be an early April Fool's joke, I hope?? Please say it is!

    Why in the world should the City of Evanston give ANYONE a gift?

    The best gift the City can give all it's citizens and the community is to provide clear and consistent governance, give a framework of law, enforce the rules and make rational decisions.

    Resources like money are scarce, so that suggests that giving the Music Institute $165,000 implies that this money can't be used for another project, or our taxes go up by $165,000.

    The Music Institute as ALREADY DECIDED TO MOVE TO EVANSTON.

    WE DON'T NEED TO GIVE THEM ANY OF MY OR YOUR HARD EARNED MONEY.

    I am happy to know of this move, but how does a cost/benefit analysis justify this proposal?

    This should have been Dead on Arrival and City Council shouldn't even be wasting their time considering such a preposterous idea.

    Please, please say this is an early April Fool's joke!

     

  7. I completely agree with all

    I completely agree with all of the above comments. We should all remember though that we, as registered voters CAN make a difference in the upcoming election. If you are not happy with the constant free money given out but this city, vote for change!! Show this mayor and council that we want them to STOP giving away money!

    1. How can we vote for change?

      It is impossible to vote for change when the majority of our elected officials don't even have someone running against them in the upcoming election.

      The only way to fight back is to start showing up at Council Meetings and letting them know that we are watching, don't care for what we are seeing and intend to make a lot of noise about their shifty business practices.

      Have you ever gone to a Council meeting?  It is truly a pain because it never starts on time (because other committee meetings need to end before the Council meeting can start) but it is worth it to go down there and let them see people care.

      Watching the coverage on the city channel only benefits the watcher – the aldermen never see that people are concerned when we aren't there in person.  Also, they bank on the fact that most people are not knowledgeable of what is going on in town…  which is quite true of a large part of the populace.

      Anyone that does show up to complain is so in the minority that it makes it easy for them to be overlooked and viewed as some type of nut job for actually caring.  Evanston residents that do care about this kind of thing need to organize and start showing up at council meetings on a regular basis.

      At the very least, a core subset of a larger group should be there to show we are rational when we make comment during citizen comment.  It is the only way to figuratively crack these officials on the back of the head and realize they have an entire city of people who they need to listen to.

      1. A great suggestion to attend Council meetings

        This site published a great comparison article on  the upcoming Alderperson election. I agree with you that many do not have a choice, but many of us do.

        I also agree with you and think it it a great suggestion that we all go and attend the meetings!

  8. A ‘Wink, wink, nod, nod’ ?

    As in the Monty Python skit, I wonder if the Council tells some of these businesses "Oh yes come to our wonderful community built on equality for all, fair taxes, no government pressures,…" but Wink, Wink, Nod, Nod we promise you all kinds of financial support and will even help against your compeditors.

    The Council makes this sound like an after the fact deal.  Was the promise already made if they would move ?

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