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Health & Fitness

Former Mayor Belsky opposes Ravinia Business District Tax

Ravinia Special Service Area Tax Not Needed

As reported in the Highland Park News this week the City Council is set to vote on establishing a Special Service Area (SSA) that will tax the Ravinia Business District property owners to the tune of $90,000 a year. The purpose is to promote and market the district.

The same area has a Tax Increment Financing (TIF) District which has been in place since 2004 and produces $173k per year, with a current fund balance as of $873,000. This mechanism generates a tax on the increased value of property as a result of public improvements, more business activity or redevelopment. Adding new tax on property owners will work against this purpose.

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The idea behind the TIF was to generate dollars for economic development in Ravinia. Eligible expenditures include land acquisition, street scape improvements, incentives, and the very type of marketing and promotion being contemplated by the Special Service Area. In fact a recent market study of the Ravinia District was paid for by this TIF fund.

In the article the Council asserts that they have $6.0 to $7.0mm in improvements to make to the District yet the TIF will only generate $2.95mm by 2029 when it expires. First I question the scope of the project as $6.0 to $7.0mm is a lot to invest for streetscape. But more importantly they are missing the point behind Tax Increment Finance.

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As you make improvements the value of property should increase. As this happens existing tax rates are applied to the property and the incremental increase goes to the TIF Fund. As the increment increases you accumulate more cash for street scape and other economic development activities. So you cannot assume that the District remains static at $173k. It should increase as improvements are made and business activity increases. One thing for sure though is putting an additional tax on property will only depress development and perhaps increase vacancies.

 The Council is also under the impression that other borrowing commitments preclude financing against the increment. This is just not the case. The TIF District, once established, is a separate and distinct entity with the ability to finance against the increment, independently from what the City may be doing elsewhere.

While I think the SSA tax and the idea of promoting the District is well intended I would recommend the following:

1) Have a vision for the District before committing to $6 to 7 million dollar street in street scape improvements. This is the classic chicken and egg question. You may spend a lot of money and have a nice looking district but no business. While I believe that Ravinia should remain a neighborhood business district it does have potential to be another attraction for Highland Park.

For example, some of the marketing dollars from the existing $800k could help attract and sponsor an annual antique fair along the lines of the Port Clinton Art Fair. It could also be coupled with a Taste of Ravinia.

Not only would this bring people to Ravinia but may suggest to antique vendors that this would be a good place for a permanent location.

Another idea would be to incentivize a small bed and breakfast industry that would enable Ravinia Festival weekends for people from out of town.

2) Use the existing $800k to start making improvements such as lighting and planters.  This can be added to with borrowing against the increment. To be conservative borrowing against an assumed cash flow of $150k over 15 years generates another $2.0mm. By not using the full $173k you are leaving additional dollars for incentives and marketing.

3) Use what is in the fund to provide incentives for new business locations. The last market study had some good recommendations that were not acted on by this administration. For example, the use of TIF dollars to write down rent for a couple of years to help start- up businesses get on their feet.

In conclusion there is no need for this Special Service Area tax as the resources are provided through the TIF District. Further committing $6.0 to $7.0mm dollars without a vision is reckless and a more measured or phased approach is the fiscally responsible thing to do.

Michael D. Belsky

Mayor of Highland Park

2003-2011

1008 Deerfield Road

Highland Park, IL.

60035





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