An Aurora City Council committee has recommended taking the beginning step toward establishing a tax increment financing district for a $53.8 million downtown apartment project.
City Council members on the Finance Committee recommended what is known as an inducement resolution for the proposed development of 140 apartments and 20 townhomes between River Street and the Fox River, right at the base of the new pedestrian bridge on the west bank.
An inducement resolution signals the city’s intention to approve the TIF district, but does not commit the city to establishing one. It starts the process of a study by a TIF consultant to see if the property qualifies for such a district.
In TIF districts, assessed value is frozen for the purpose of tax collection, and as the value of the property rises, the taxes created by increasing property value goes into a special fund, known as an increment. That money is used for expenses related to the development.
It means that for the length of the TIF district, only the city-supported project gets the benefit of the increased property value, not other taxing districts.
For that reason, Aurora has increasingly tried to limit its TIF districts by making them small and tied only to a specific development – known as micro-TIFs. In the case of the proposed district for this development, the city has proposed it last only 20 years, instead of the maximum 23 years as allowed in state law.
City officials have said West Aurora School District officials were agreeable to that length of time.
Aldermen approved a redevelopment agreement earlier this month between the city and developers Windfall Group LLC, which will build the residential development. The company is the same that has been developing Pacifica Square on the far East Side of the city.
Aldermen also approved final plans for the residential development.
The $53.8 million complex will include 140 rental units and 20 townhouses, and will be built on 3.3 acres the city owns along the riverfront.
The apartments are the first major housing units along that section of the west riverbank, and signal the start of an area city officials believe will become its own sort of residential neighborhood. The city owns about another six acres along the riverfront between the proposed development and the Hollywood Casino entrance.
The Windfall development also is the start of redevelopment in the eight-block area surrounded by Lake Street, New York Street, River Street and View Street.
The city is soon to receive a draft of what is known as the Westside Riverfront Subarea Plan for that area, being done by SCB Architects. The plan anticipates more multi-family residential development in that part of the city.
In the Windfall redevelopment agreement, the city would pay about $6.6 million in construction costs, which would not be needed until May 2023, as well as deed the 3.3-acre site to Windfall, a value of about $2 million.
The overall agreement would have the city footing the bill for about 12% of the value of the development, with Windfall paying 13% of it with direct equity of its own, and the remaining 75% with a loan Windfall would take out.
The city would likely pass bonds for the $6.6 million, which it would pay back with money raised by the proposed tax increment financing district, if it is established.
Officials recently pointed out that trying to establish the TIF district is part of the redevelopment agreement. If the TIF district is not established, it would mean the redevelopment agreement would either be void, or would have to be amended.
Aldermen on the Finance Committee asked city staff if they thought Windfall would do the development without the TIF district. The property also falls within a federal opportunity zone, and city officials said that, too, is a good incentive for the developers.
“This (the TIF district) is another incentive to have in the bullpen,” said Alex Alexandrou, the city’s chief management officer. “If that went awry, we would still argue there is enough with the opportunity zone.”
Ald. Sherman Jenkins, at large, suggested that including the TIF district in this deal might create a situation where every other developer coming in would ask for a TIF district.
Trevor Dick, Aurora Economic Development Office assistant director, said TIF districts are always on the table, but they don’t fit every development.
“We get asked for a lot of incentives,” he said. “We say no a lot.”
Officials have said as more development comes in, the amount of incentives the city is offering is lessening.
“We’re still in a very competitive market,” Alexandrou said. “But as these developments come to us, there is less and less we’re hoping to have to do.”
The full council will look at the inducement resolution at the City Council Committee of the Whole meeting Tuesday.
