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A report from students at Northwestern’s Kellogg School of Management says Evanston needs to better define the goals and strategy for two new tax increment financing districts.

The student report, presented to an audience filled with city officials at the Civic Center Monday evening, says its unclear whether there’s enough market demand to make the Evanston Plaza shopping center successful.

The newly approved Dempster-Dodge TIF targets the plaza, but the report says it faces intense competition from the newer Main Street Marketplace shoppping center a half mile away.

Top: Kellogg student Eric Nyman at the mike, along with the other team members, Seth Capron, Eric Nyman and Brandon Strong. Above: City Manager Wally Bobkiewicz and Community and Economic Development Director Steve Griffin listen to the presentation.

The marketplace, the students note, has two anchor tenants — Marshall’s and Sam’s Club — that are destination retailers that draw traffic from a wide area.

By contrast, the only remaining anchor at Dempster Plaza is the Dominick’s supermarket, which faces competition from the Jewel-Osco in the Howard-Hartrey plaza.

Dominck’s the students say, “has no competitive advantage in terms of price or quality.”

The students suggest that some of the $2 million in TIF funding targeted for near-term capital improvements at Dempster-Dodge should be earmarked to subsidize new tenants rather than the shopping center owner.

Without careful planning, they say, the money may be viewed as a “slush fund” for projects that don’t necessarily support the goal of attracting quality tenants to the center.

Mayor Elizabeth Tisdahl, and aldermen Mark Tendam, 6th Ward, and Don Wilson, 4th Ward, at the session.

The students also offer doubts about the viability of the Chicago-Main TIF that’s scheduled for final approval by the City Council next month.

They suggest the city’s goal of building a 90,000 square foot office building on a vacant parcel at the intersection may be unrealistic — given that only a handful of Evanston businesses occupy even a tenth as much space.

While the site is served by two transit lines, the students note that those lines have been in place for decades, yet no major office development has occurred there, even in boom times.

The report suggests that the city should shift as much financial risk for the Chicago-Main project to the private sector as possible — perhaps using a pay-as-you-go structure to provide a tax abatement — rather than providing city money up front to close a development funding gap.

The student report, commissioned by the city, was prepared as part of a course focused on public policy questions in real estate development supervised by Kellogg Professor Therese McGuire.

At least one of the students’ recommendations — that a group of local stakeholders be created to provide oversight for TIFs — is already being baked into final plans for the Chicago-Main TIF.

Related

Video of the Kellogg presentation

Bill Smith is the editor and publisher of Evanston Now.

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5 Comments

  1. Aldermen got their answer – TIFS are not the answer

    In other words, the Evanston Plaza shopping center TIF and the proposed Main Street TIF is a waste of taxpayers money and is not the best way to redevelop these areas.

    Aldermen approved a TIF for the shopping center built in the 1970s and purchased by an investment firm a year ago in a foreclosure. That firm, Bonnie Investments, also received a 66 percent tax reduction for the purchase of the shopping center. Millions of dollars of our tax money will be diverted from schools and city services and routed back into the shopping center to be used at the discretion of city staff.

    What is the goal of the City Council? Keep funneling taxpayer dollars in loans and grants to benefit  businesses they like? The City Council has increased taxes more than 20 percent in the past several years. Our taxes, water rates, fees and fines keep rising as the city liquidates its assets. And for what? To subsidize a few lucky businesses, investment firms, government unions and non-profits?

    This TIF business is a big deal.

    I wonder what Evanston aldermen think about this TIF presentation? Most of them supported the shopping center TIF as well as a $15,000 loan and possibly soon a $20,000 grant for a non-profit business that doesn't have its non-profit status and owes $17,000 in property back taxes? 

     

  2. Tisk, tisk.  Even the Kellogg

    Tisk, tisk.  Even the Kellogg students know the building at Main and Chicago is an awful idea.  Why is Wally paid $250k/year to push us into bad development and shun local people with new ideas?

  3. Wally looks like he’s going to cry

    Some 20 somethings have more sense than city staff and public officials?   Given our Mayor is a college drop out, and a couple of council members who gave up their law licenses, along with a few others who appear to do nothing for a living, it not hard to see why we have a problem here.

    These public officials are not creating investments, the Wine and Cheese Bar is the poster child of their poor economic development, along with the Lit Theather and several other interesting projects of no value.

    Wally creating a line of credit on the one TIF even prior to any increment coming is total out of control, along with raiding the parking fund for a loan. its all very interesting.

    All the while these people sell off our parks on the cheap to their freinds.  The council recently did an interesting thing when it put the bid for the lighthouse park land behind closed doors,rather than openning the bids in public.

    Far too many people both in the city and others are misusing our money for the own benefit. 

     

  4. More wasted money

    Besides the TIF waste of money, the city officials continue to open Clark St. washrooms year round and pay  $1000- $1200 a month in electric bills for that building all winter long  for the 1-2 people a day to use it !

  5. TIF answer

    The city has done a great job with past tifs but I will concede the dempster tif is difficult and questionable as it is formulated now. Things are not so simple though. 

    The fact of the matter is that the taxpayer has already lost it's tax revenue there by 66%,  If nothing happens at the plaza with a little more time the owner may get further hardship tax abatements and we will lose even more tax revenue.

    Remember what the students said, use the 2 million to subsidize tenants.  Thats still spending taxpayer cash and may or may not get the r.e. taxes paid increased while we give away money directly to any number of tenants with even greater risk of return.

    If a tif was implemented earlier the taxes would have stayed the same instead of decreasing by 66% as they are today.  Only the money from the increases would have been diverted back to the project and we would get payback at the end of the tif.  Or like virtually every other tif in town some of the increases get distributed  to the taxing districts before the tif expires. 

    Not saying the tif is correct or not, just saying that things are more difficult than what these kids say.  One thing is for sure, because the tif wasn't implemented earlier, we have lost 66% of the tax revenue, and that is absolute.

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