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HomeMy WebLinkAbout01/11/1994 COW minutes REVISED 1126194 2~09~94 MINUTES COMMITTEE OF THE WHOLE JANUARY 11, 1994 I. CALL TO ORDER The meeting was called to order by Mayor Gerald Farley at 7 33 p m Present at the meeting were Trustees T~mothy Corcoran, Paul Hoefert, M~chaele Skowron and Irvana Wilks Trustee R~chard Hendncks arnved at 7.37 p m Trustee Clowes arrived at 8 33 p m Also present at the meeting were Village Manager M~chael Janoms, Assistant to the V~llage Manager Dawd Strahl, F~nance D~rector David Jepson, Planmng D~rector Wilham Cooney and Economic Development Coordinator Kenneth Fritz II. MINUTES The M~nutes of November 23, 1993 were approved Trustee VV~lks made a Motion to approve the Minutes and Seconded by Trustee Skowron The M~nutes were unanimously approved Minutes from December 14, 1993 were approved on a Motion by Trustee Wilks and Seconded by Trustee Hoefert Trustee Hoefert requested the M~nutes be modified to ~nclude h~s name under Trustees present for that meeting III. CITIZENS TO BE HEARD Mayor Farley spoke prowd~ng an update on the Celesbal Celebration scheduled for January 29, 1994 He stated that over 500 t~ckets had been sold, however, there is sbll room available tf c~t~zens are interested ~n getbng tickets Resident Emie Lasse, 805 South Elm, spoke He quesboned the V~llage Board's inab~hty to reduce expenses to address the budget problems for th~s coming fiscal year He stated that he was challenged the last meeting by the Mayor and Trustees to come up w~th service reducbons However, he has no authority to come up with such serv~ca reductmns Therefore, he asked for the authority from the Board to go into each Department to review their operabon and budget to determine where cuts can be made If sawngs are reahzed, he would accept 50% of the sawngs of each Department as compensabon IV. MORTGAGE CREDIT CERTIFICATION PROGRAM Village Manager Michael Janonis introduced the program He stated the Ilhno~s Housing Development Authonty had asked the V~llage staff of Mount Prospect ~f they would be ~nterested ~n part~=patlng ~n the Mortgage Credit Cerbficate Program The Program prowdes first-t~me homebuyers w~th a mortgage credit on 25% of their annual pa~d mortgage ~nterest Th~s credit can be apphed to the property owner's Federal Income Tax return The remaining 75% would be ehg~ble for the normal Federal Tax deduction The Tax crad~t is a dollar-for-dollar reduction in the borrower's tax hab~hty The Program requires ehg~ble apphcants to apply d;rectly for a private loan from approved pnvate lend~ng msbtut;on w~thm the V~llage of Mount Prospect to obtain the necessary mortgage for the property under cons~derabon If the Development Authority concurs w~th the lender, ~t w~ll ~ssue the Cert;ficabon Document d,rectly to the apphcant authorizing them to use 25% of their mortgage interest payment as Federal Tax credit In order to activate th~s Program, the V~llage Board w~ll need to approve the Mortgage Credit Certificate Program Agreement which authonzes the Ilhno~s Hous;ng Development Authority to administer the Program for the V;llage of Mount Prospect Les Ballerlne, of the III,nois Housing Development Authority, spoke Mount Prospect would be ~ncluded as part of th~s program w~th ten other ~bes ~n northeastern Ill~nms He feels ~t ~s a w~n/w~n s~tuat~on for the ~t~zens and the V~llage to offer th~s program to first-t~me homebuyers He stated that the Tax credit makes the program especially attractive to flrst-t~me homebuyers Tax credit ~s designed for a reduction ~n taxes through a Federal Tax deduction on their April 15 taxes Trustee Hoefert asked if there were any hm~ts on ~ncome or the amounts purchased to quahfy under th~s Program Mr, Ballerlne stated the hm~tabons are based on ~ncome and the cost of the purchase of the home Those hm~tabons are prowded ~n the package of informabon prowded to all Trustees Mayor Farley asked ~f Mount Prospect had participated ~n a program s~m~lar to th~s before Dave Jepson stated that the V~llage had prewously participated ~n a s~m~lar Program through a pnvate company Th~s would be the first bme that the d~rect credit would be provided on taxes ~n cooperabon w~th the local banks and the Ilhno~s Housing Development Authonty, Trustee Wilks asked ~f first-time homebuyers were the only ones that would benefit from such a program and also asked what the esbmate of what the number of fam~hes benefited would be Mr. Ballerlne stated that he assumed approximately 30 fam~hes would be able to take advantage of the Program The Program would be hm~ted to Village residents and c~bzens ~nterested in buying in Mount Prospect for the first time Any remaining money would go into the overall pool for all other communities that participate ~n the Program Commumcaflon of the Program would be prowded through Newsletters, the banks that are part~pat~ng and the local newspapers The implementabon would be an Intergovernmental Agreement between the V~llage and the Ilhno~s Housing Development Authority allowing them to adm~mster the program The Authority would also make the Agreement d~rectly w~th the lenders that are participating ~n the program Mayor Farley stated that there appears to be Village Board consensus and instructed the V~llage Manager to proceed w~th implemenbng the necessary paperwork to get the Program on hne Mr. Janonis stated he would bring th~s back for final Board approval on January 18 ~n order to get the program ~n place by February 1. Some meebngs w~th area banks have taken place and they have expressed ~nterest We w~ll also take care of getting the necessary word out to ensure there is adequate part~cipabon in the program Vo BUSINESS ASSlSTANCEIINCENTIVE PROGRAM Mayor Farley introduced the topic by stating that th~s item is related to the development of the Target Store as a specific example and an overall program for bus~ness development throughout the V~llage He had also asked for some input from the Economic Development Commission as part of th~s d~scuss~on Manager Janonis prowded additional mformabon concerning this topic He stated th~s is a long-range ~ssue for the V~llage Board which includes a determination of the type of goal they are interested ~n relabng to bus~ness attraction and retenbon Other c~tles have taken a different approach to the s~tuat~on depending on what their focus ~s Some communities have entertained some property tax reclass~ficabon and other programs He feels th~s is a policy decision for the V~llage Board and is a question of equity. There has not been much ~nternal debate on any specific recommendation to prowde mformat~on to the V~llage Board primarily because there has been no policy decision as yet Don Kane, of Kane McKenna, is present representing the proposed Target store He ~s available for a general presentation to the V~llage Board if they are interested The idea of h~s presentabon w~ll focus on raising the level of comfort to rewew the decision completely by prowd~ng all the necessary mformabon that Trustees m~ght want to consider ~n formulating a pohcy It is up to the Village Board to proceed w~th th~s ~tem if they are Interested Mayor Farley asked Don Kane, of Kane-McKenna, to proceed with h~s presentation Don Kane spoke on the topic of Business Assistance and Incenbve Programs for V~llages He stated that the top~cs and issues that the V~llage Board ~s currently strugghng with ~s not that much d~fferent from the top~cs that he has been ~nvolved ~n w~th other V~llages Chart I shows the perceived benefits to the V~llage includ~ng Property Tax rehef through increased Sales Tax and a benefit of trade area w~th~n the V~llage to generate Sales Tax He stated that many other c~bes have looked at Sales Tax benefit from residents outside the V~llage as an ~mpetus to approve such projects The Chart also shows the employment base ~mpact on the area economy As w~th all commun~bes, the goal is to d~vers~fy the Tax Base which typ~cel retail projects are able to accomplish Chart II shows various information relating to how residents benefit from such developments as retail and the hm~ted nsk to V~llages for providing mcenbves Incentives are typically prowded only through ~ncremental ~ncreases in the Tax Base V~llages typically structure the ~ncent~ves by taking the first cut of revenues and g~wng back portions of incremental increases to assist m the m~t[al development of the retail project Therefore, the store ~s required to perform through sales ~n order to receive the money from the V~llages by way of ~ncent~ves V~llages verify the amount of sales annually through the Sales Tax transmission sheets sent d~rectly to the community All ~ncent~ves are structured as to not to risk Bond rabngs of commun~bes by prowd~ng close, incentives As stores then the V~llages are not hable for the balance of the incentives because of the structure of the incenbves being prowded on the ~ncremental bas~s Therefore, the store has to be open and generating sales ~n order to receive ~ncent~ve payments All V~llages have built-in protecbon necessary to m~n~m~ze to ehm~nate risk Incenbve programs must show a clear and definite reason for the ~ncent~ves due to extraordinary costs such as s~te clean up, as th~s s~te requires V~llages must maintain Iog~cel and apphed spe~fic cntena for incenbves Th~s cntena can be measured against the "but for" arguments concerning the development of vanous s~tes that may need incenbves ~n order to develop Chart III shows the summary of comments related to the V~llage's concern of equity among other businesses Control could be placed on mcenbves through m~mmum defined standards which have to be met ~n order for ~ncent~ves to be considered Other protections could ~nclude protection of the trade area which specific development ~s designed to take advantage of He also suggested that V~llages not consider exemptions of normal planning and development fees whmh could be used to assist ~n seed money for economic development issues Aisc, when you look at the Target areas whmh may be ~ncluded m such a development such as the Target ~t ~s ~mportant to look at the ~mpact Target would have ~n drawing sales from outside the V~llage If we are going to take advantage of the Target area, ~t m~ght as ~n V~llage so are by well be the the benefits derived Mount Prospect Manager Janonis asked what determines a trade area of various retail developments For example, Home Depot trade area ~s much larger than the Target trade area The trade area actually extends up toward the Wisconsin border Don Kane responded by stating that many new businesses ~n the Chicago area look at what real estate agents look at also within an area based on Iocabons of other compebtors and studies of populabon and traffic patterns Trustee Hoefert asked some general quesbons concerning the presentabon What is the relatmnshlp of the cost of the s~te and its development ~n relabon to the items sold ~n the store Also, it appears as ~f the land cost increases over time as the amount of available land decreases, therefore, each s~te ehg~ble for development becomes more economically feasible Such a store can only go ~n so many s~tes If the site ~s valuable, then someone will buy the land If the land is defecbve, then the value of the land must be affected based on the market forces related to land in th~s condition ~ Trustee W,lks stated that she generally felt government should not g~ve ~ncent~ves because it ~s not the government's m~ss~on to pay for such th~ngs which business ~s responsible for. The only ~ncenbve she can see would be mcenbves which would apply to everyone equally For example, if Incent~ves were prowded to Target that would affect Venture and Walmart even though they d~d not request incenbves when located here they Don Kane responded to Trustee Hoefert and Trustee Wilks' comments He stated that projected sales may allow paying additional cost for the land and recover some excessive costs of the land, however, there ~s a breakpoint for such property The value of property ~s based on the g~ven use of the property and the zoning that may be attached to that property Some V~llages have responded to the problems of defective property by assisting ~n pubhc ~mprovements which not only benefit the property but also surrounding properties He also stated that other V~llages have looked at all details of ~ncent~ves and have determined that ~t is not an exact science Much of their rewew has ~ncluded the "but for'' argument and their need to be a clearly defined benefit to the Village ~n order to prowde such benefits and ~ncenbves He also suggested that any rules relating to ~ncent~ves for existing businesses be based on incremental benefits to the Village itself Mayor Farley asked for input from other resources ~nclud~ng the audience and staff Dave Jepson spoke He prowded an overview of ~ncentlves which the V~llage had prowded ~n the past These seven types of incent~ves include 6b Class Exemptions for Property Taxes, Site Improvements, Industrial Revenue Bonds, Estabhshment of TIF Areas, Pubhc Improvements and Joint Funding Assistance for a Study at Mt Prospect Plaza along w~th Parking Ava~lab~hty forthe Downtown Jim Ebbinghaus, Chairman of the Economic Development Commission, spoke The Commission has d~scussed basically the same issues which Don Kane has brought up ~n h~s presentabon The EDC was asked to prowde a recommendabon to the V~llage Board concerning Economic Bus~ness Incenbves Again, we m~rror the concern of some Trustees relabng to the equity of prowd~ng incentives to new businesses and how that relates to existing businesses We feel a case-by-case rewew must be prowded to determine whether ~ncenbves should be considered at all He also stated that mcenbves should be considered for ex~sbng businesses in order to retain them and encourage additional businesses to come to Mount Prospect wh~le hm~tmg all risk of financial impact to the Village itself Extraordinary costs may also have to be considered in determining whether an incenbve package w~ll be offered Five items that the EDC would offer for cons~derabon m defining economic ~ncenbves include the following Extraordinary land cost Shared renovabon cost for structure ~mprovements Accelerated permit processing Infrastructure improvements Fee deferral such as Development Fees and Permit Fees The EDC would endorse the use of ~ncent~ves based on future bus~ness demands taking into account the five items prewously hsted Trustee Clowes asked J~m Ebb~nghaus how he would define or how the EDC has defined unexpected expenses and how they apply to the Target situation Mr. Ebbinghaus stated the unexpected expenses were not necessanly the term chosen to be used, however, the meaning should be used ~n d~scussmg ~ssues which are related to enwronmental concerns linked to property which can be developed within the V~llage Trustee Clowes then directed a quesbon to Don Kane The trade area assumption which you put forth is based on the assumptmn that new sales will occur over a large area, however, it appears to me that some sales would impact Mount Prospect and may not actually offer a net gain to the Village He also asked about the annual cost ~mpact of locating in other Counties such as Lake or DuPage where the Property Tax rate ~s s~gmficantly d~fferent than Cook County and how would such a Property Tax rate ~mpact operating costs He also asked how can you define the "but for" argument in a meaningful way Don Kane responded to Trustee Clowes' quesbons He stated that a s~m~lar issue concerning the trade area question was also d~scussed among the Evanston C~ty Council Some of the informabon that was prowded ~ncluded a hst of trade areas w~th the cross ~mpacts of Iocabng at a certain Iocabon and ~ts impact on other trade area Unfortunately, due to the difficulty of obtaining reliable data, this document had hm~ted use 6 However, ~t was shown that the effect was much less than expected but showed additional sp~n-off dollars which are generated through retail The conclusion was that the effect would be on businesses anyway regardless of the trade area involved or the overlap, therefore, the store m~ght as well be located within the town so the town could benefit from the store's location and tap any revenue which it m~ght generate Property Taxes do affect the operating costs of a reta~l estabhshment which ~s reflected ~n sales and the threshold of profit of those sales He stated that it is a questmn of philosophy for the V~llage Board to determine the level of assistance, however, they can verify all excessive operabng costs through rewew of records and mformat~on submitted by the bus,ness which is requesbng the assistance He further stated that the Village could require businesses to put up all front-up costs and m~n~m~ze the risk of any ~ncenbves prowded to the business The length of bme for m~n~m~z~ng risk is dependent upon the return~the business prowdes through add~bonal revenues and incremental increases in revenues to the Village Mayor Farley stated the question before the V~llage Board ~s whether to continue to develop an Incentive Program and requested staff come up w~th some options for the Village Board to consider. Trustee Corcoran stated that h~s opinion ~s as follows concerning ~ncenbves He beheves that an ~ncenbve package can be developed based on standards which can be defined in order to minimize all risk to the V~llage Such a program could also include a component for pubhc ~mprovements Any such program would have to be based on ~ncremental ~ncreases in revenue He feels ~t is necessary to keep the marketplace wable ~n order for Mount Prospect to compete There must be a focus to relieve Property Tax rehance and d~vers~fy the Tax Base of a community Businesses are going to locate ~n the general wcm~ty ~n order to take advantage of the possible dollars whmh Mount Prospect residents may spend at such locations These businesses m~ght as well locate w~th~n Mount Prospect in order for the V~llage to at least receive some benefit Mayor Farley stated that he supports the continued exploration of th~s ~ssue He feels that the need to explore th~s ~ssue ~s related to the fact that the community is a mature community and must compete w~th commun~bes which may have not matured to Mount Prospect's level Trustee W~lks stated most businesses that came to us ~n the past requesbng some type of incentives were not on the same scale as Target She does not want to close the door but would hke to focus on pubhc improvements which would benefit the bus~ness and the community at large She feels the current request ~s too much for the V~llage at th~s point Trustee Hoefert stated he supports further d~scuss~on, however, does not support the current payment request to Target He feels the value of the property should be less because the property is defective whmh would ~mpact the amount of the purchase price of the property Trustee Hendricks stated that he feels the owner of the property should prowde the incentives because they own the property and they w~ll receive the benefit of selhng the property He stated he is opposed to providing any type of ~ncentwes to Target Trustee Clowes stated he would support continued research of this issue but would prefer any incent~ve package t~ed d~rectly to pubhc improvements and any additional Sales Tax dollars would help fund such public improvements He beheves it is ~mportant to benefit all concerned w~th such incentives not just the bus~ness He is concerned about revenue incenbves t~ed to future Sales Tax dollars where the tax dollars would normally flow to the V~llage as revenue He would support incent~ves t~ed to pubhc ~mprovements Trustee Skowron stated she believes that the V~llage can benefit from additional dollars as long as there is no rusk to the V~llage and all incent~ves are pa~d w~th ~ncremental revenues which would be generated from such a bus~ness She also felt that we can work w~th ex~stmg businesses m order to have a comprehensive plan It ~s important to cultwate growth of businesses to d~vers~fy the Tax Base and she supports further development of a package by the staff to be brought back to the V~llage Board for further d~scuss~on Manager Janonis stated he would put together a general frame work with staff ~n order to develop a pohcy w~th clearly defined cntena to benefit ex~st~ng businesses and future businesses and w~ll use the Target proposal as a model for developing one-third of the entire program relating to attracting new businesses which are not manufactunng Hopefully, we can present a comprehensive pohcy for rewew of the Board by the summer or fall of th~s year and will continue to work with Target to resolve the current ~ssue of ~ncent~ves for their proposed location VI. MANAGER'S REPORT No Manager's Report VII. ANY OTHER BUSINESS Trustee Hendricks asked the V~llage Manager to respect two s~gns at Bus~ness Center Drive and North Wolf Road These signs appear to be temporary and would hke the Manager to find out when the temporary s~gn permit was approved He beheves the temporary permit may have expired beceuse the s~gns have been up for an extensive period of t~me VIII. ADJOURNMENT The meeting was adjourned at 10 14 p m Respeqtfully su. bm~tted, ID STRAHL DS/rcc Assistant to the V~llage Manager