Evanston aldermen this year have voted to spend over $10 million on economic development activities.
That’s only about 4 percent of the city’s total annual spending of more than $250 million.
But the pace of such spending — now that the aldermen have declared economic development their top priority and dramatically increased the staff working on development efforts — is giving some residents and some aldermen pause.
The money for the spending comes from a wide range of sources — from federal grants to property taxes collected by tax increment financing districts and from the city’s hotel-motel tax to its parking fund.
Here are the three biggest projects approved so far this year:
1. Emerson Square
On May 14 the City Council approved spending $1.5 million to acquire the former Bishop-Freeman factory site on Foster Street for redevelopment as mixed-income housing.
Overall the project is expected to involve $3.1 million in city funds, including $2.1 million from the federal Neighborhood Stabilization Program grant, $600,000 from the West Evanston TIF, $300,000 from the federal HOME program grant and $100,000 from the city’s Affordable Housing Fund.
2. Trader Joe’s lot
Aldermen voted May 7 to spend $2.05 million from the city’s Parking Fund to acquire property at 1223-25 and 1229 Chicago Ave. that will be leased for 70 years as a parking lot for the planned Trader Joe’s market for a one-time license fee of $50,000 to be paid by the developer.
3. Dempster-Dodge TIF
The City Council voted 6-2 on June 25 to create a new tax increment financing district for the Dempster Plaza shopping center. A city consultant estimates the development could capture $23 million in new tax revenue for development projects at the plaza over the 23-year life of the TIF. A prelimary proposal approved 5-3 by aldermen anticipates spending $2 million from the TIF on improvements to the shopping center in the near term.
Beyond those big three projects, much of the rest of the city’s economic development activity is paid for by the fund of the same name.
Economic Development Fund
The Economic Development Fund was budgeted to spend about $1.9 million for 2012, not including transfers from the fund’s balance to other city funds.
Roughly $658,000 of the spending will go to staff salaries and fringe benefit with another $207,000 for consultants and $50,000 for travel, memberships, furniture and other miscellaneous costs.
That leaves just under $1 million for loans, grants and other forms of direct assistance to businesses.
The City Council also increased the fund’s budget by $110,000 on June 11 to pay for a sidewalk paving project on Central Street.
Most revenue for the Economic Development Fund comes from the city’s hotel-motel tax.
The funds activities are divided into several smaller accounts.
Business Attraction and Expansion Investment Account
The Economic Development Fund’s Business Attraction and Expansion Investment Account is budgeted at $500,000. As of today, $325,500 — or 65 percent of the total — has been committed to projects.
The biggest slice is being spent to bring a new restaurant to Evanston.
Based on a City Council vote May 14, the Chicago’s Home of Chicken and Waffles will get a loan of $200,000 for build-out costs for the proposed restaurant at 2424 Dempster St. The city’s participation represents about 26 percent of the projected $764,000 cost of purchasing and developing the property.
Partnership Contribution Account
The Economic Development Partnership Contribution Account is budgeted at $280,000. As of today, $123,550 — or 44 percent of the total — has been commited to various projects.
Those projects include:
- A projected $100,000 to the Technology Innovation Center at 820 Davis St. The second quarterly $25,000 payment was approved by City Council June 11.
- A $35,050 grant to Now We’re Cookin’ at 1601 Payne St. to expand its shared kitchen business into a full-service food industry business incubator. The grant, approved Monday by the City Council on a 4-4 vote with the mayor breaking the tie in favor of the project, represents 52 percent of the projected first year cost of the expansion project, with the rest to be funded by Now We’re Cookin’. The business expects to also request further grants in years two and three of the project.
Business District Improvement Fund
The Business District Improvement Fund, budgeted at $147,000 for 2012, is subdivided into two program accounts, the Facade Improvement Program and the Great Merchant Grants program.
Facade Improvement Program
The Facade Improvement Program is budgeted at $75,000 for 2012, of which $35,482 — or 47 percent of the total — has been committed to various projects. The money awarded is designated as loans that are forgiven if the businesses meet certain conditions and the city funds are limited to 50 percent of the cost of each project.
Those projects include:
- Evanston Festival Theatre, 600 Main St. — Request for $2,250 for new exterior lighting fixtures. Approved by City Council Feb. 13.
- Bossell Imports, 1905 Church St. — Request for $1,400 for repainting, new signage and a larger front window. Approved by City Council Feb. 13.
- Hecky’s BBQ, 1902 Green Bay Road — Request for $11,500 for new windows, door, signage, lighting and masonry work. Approved by City Council Feb. 13.
- IRMCO, 2117 Greenleaf St. — Request for $13,943.69 for renovations to its factory building facade. Approved by City Council Feb. 13.
- Unicorn Cafe, 1732 Sherman Ave. — Request for $1,050 for a new fabric awning on the existing metal frame. Approved by City Council June 11.
- Studio SLK, 1934 Maple Ave. — Request for $1,318 for replacement of the salon’s awning and tuckpointing, painting and other facade work. Approved by City Council July 23.
Tonight the Economic Development Committee is scheduled to consider two additional facade improvement requests.
- Minasian Rug Company, 1244 Chicago Ave. — Request for $5,250 to replace awnings and repaint the storefront.
- Found Restaurant, 1631 Chicago Ave. — Request for $8,520 to replace existing glass in the storefront with bi-fold window-doors.
Great Merchants Grants
This program, intended for neighborhood shopping districts, is budgeted at $72,000 with $46,725 or 65 percent of the funds already allocated.
- Chicago-Dempster Merchants Association — On Jan. 9 the City Council approved a request for $9,000 for plantings, banners, sidewalk sale advertising and holiday decorations.
- Dr. Hill Business Association — On Jan. 9 the City Council approved a request for $9,000 for sculpture maintenance, planters and a “Dogs on Parade” promotional event.
- Evanston West Village Business Association — On Jan. 9 the City Council approved a request for $9,000 for a promotional merchant booklet.
- Howard Street Business Association — On Jan. 9 the City Council approved a request for $7,000 for plantings, holiday lights and website development.
- Main Street Merchants Association — On Jan. 9 the City Council approved a request for $7,300 for a merchant coupon book and website mainenance.
- West End Business District — On Feb. 13 the City Council approved a request for $5,425 for planters and plantings and website development.
Service Agreements and Contracts
Economic Development Fund service agreements and contracts account is budgeted at $65,500 for the year.
Tax increment financing districts
Tax increment finance districts are also a common source of funding for economic development projects.
West Evanston Tax Increment Financing District
So far this year the City Council this year has agreed to spend $649,500 from the West Evanston TIF for several projects:
- Evanston North Shore Contractors Cooperative, 1817 Church St. — On Jan. 9 the City Council approved a $200,000 loan from the TIF to assist in the establishment of a home services/building trades incubator. It also approved selling the vacant building to the cooperative for $1.
- 1817 Church St. — On Jan 9 the City Council voted to reinburse HUD $220,000 for the CDBG funds used in the failed African-American history museum project at this site. The repaid funds will be available for use elsewhere in the community for other projects.
- IRMCO, 2117 Greenleaf St. — On Feb. 13 the City Council approved a $63,000 construction loan to this manufacturer of lubricants to enhance its production capabilities.
- Strange Lofts, 1615 Church St. — On Feb. 13 the City Council approved a request for $16,500 for new awnings and lighting.
- Aldermen voted June 11 to spend $150,000 from the West Evanston TIF to acquire a vacant lot at 1801-05 Church St. that formerly was the site of a gas station.
Washington National Tax Increment Financing District
Aldermen have agreed to spend $67,475 from this TIF district in downtown Evanston:
- 1706-10 Sherman Ave. — Request for $9,500 for tuck pointing and tile and masonry repairs to the facade of the former Varsity Theatre building. Approved by City Council Feb. 13.
- Davis Street TIF extension — On Feb. 13 the City Council approved spending $31,000 from the TIF to have the city’s TIF consultant, Kane McKenna and Associates, investigate whether the city should expand the district to include areas along Davis Street from Benson to Oak avenues.
- Downtown Performing Arts District Study — The City Council approved a $100,000 consulting contract for this study May 14. A grant from the National Endowment for the Arts covers half the cost, with the rest split equally between the Washington National TIF district ant the city’s Economic Development Fund.
- Koi Restaurant, 624 Davis St. — Request for $1,975 for as a 50/50 match for an air curtain along the top of the windows of its front wall to comply with Health Department requirements for having the unscreened windows open during operating hours. Funded by the Washington National TIF and approved by City Council June 11.
- Aldermen voted Feb 27 for a complex rent-to-own plan for a new wine bar in a city-owned building at 729-31 Howard St. The plan involves a $130,000 loan from federal Community Development Block Grant funds for bar furnishings to be repaid over 10 years at 4 percent interest, a $100,000 grant funded by general obligation bonds to be repaid from tax increment financing district revenue to upgrade the retail space, subsidized rent on a two-bedroom apartment over the bar and a five-year lease on the retail space with an option to purchase the entire building after three years, with the rent to be applied as a downpayment on the purchase price — amounting to a subsidy of about $72,000.
- Aldermen voted July 9 to spend $15,000 this year from the City Manager’s Contingency Fund and $10,000 next year to develop an “Evanston Roadmap for the Arts.”
Projects not yet approved
- The City Council decided June 11 to temporarily withdraw plans for a TIF for the Chicago-Main shopping district with an eye toward expanding the boundaries of the proposed district.
- Aldermen told the city manager June 11 to keep working on a new plan for operation of the Noyes Cultural Arts Center to fully cover the costs of operating the space that provides venues for performing arts groups and individual artists.
- Aldermen told the city manager June 25 to keep negotiating a potential lease-to-own agreement with Chicago’s City Lit Theater Company for a city-owned building at 727-29 Howard St. Based on a preliminary term sheet for the deal prepared in January, it appears that project could involve a city subsidy of as much as $700,000 over a three-year period.
- Aldermen told the city manager July 9 to continue negotiating a potential lease of the former recycling center building to a coalition of youth sports organizations that want to develop it as an indoor sports training facility.
The key questions, of course, are whether the city’s spending on economic development yields an attractive return to taxpayers and how to tell in advance which proposals are good ones. A closeer look at those issues in a future report.
Revisions to Facade Improvement Program (adopted 3/19/12)