CHANNAHON – It wasn’t an easy pill to swallow, but members of the Channahon District 17 School Board approved this week the concept of a 15-year property tax abatement for a logistics and industrial center.
The center is planned for 118 acres on the northeast area of the Interstate 55, Bluff Road intersection. Final approval is still needed by the board.
Many school board members struggled with the longevity of the deal. Industrial Developments International, IDI, would build a 2-million-square-foot center composed of four buildings. The development would take place over 10 years.
The property does not have sewer and water, or proper roadways and interstate access. IDI and Channahon worked out a deal for the village to issue $4.4 million in 15-year general obligation bonds to fund those improvements. With interest, the project will cost $5.5 million.
The property tax abatement would refund a portion of IDI’s property taxes back to the village to service the debt on the bonds.
The abatement on building one would be 100 percent in the first year and 50 percent for the following nine years. There would be 100 percent abatement on the first year for the other three buildings and a 50 percent abatement the following four years.
The first building would come online in 2016; the second in 2020; the third in 2023; and the fourth in 2026.
The school board called in officials to explain the proposition more clearly. A key question about the deal’s financial aspects concerned the property taxes in excess of what will be used for the project.
“Recapture revenues will only be used to bring down the overall debt service obligation,” Channahon development director Mike McMahon answered in writing.
When there is a deficit in the specially-created village fund, McMahon added, the village will make the bond payments with its general revenue dollars and will be reimbursed when the fund regains a positive balance.
School board members debated if the deal would be worth it in the end for the school district.
“We’re giving you an opportunity to increase your taxes,” Jeff Smith said of IDI, “To recoup tax dollars that don’t exist today.”
In 2013, $809 in property taxes was paid on the property to District 17. School board member Derek Breen said he had a problem with the fact that the school district’s taxpayers would be paying property taxes to the school district, but for the next few years, in reality, those dollars would be going to fund property improvement.
The district’s lawyer replied that the dollars were being used as an economic development tool. In the end, the board approved the concept. IDI and the village of Channahon will be taking the abatement proposal to other local taxing bodies next.
The board Monday also approved a TIF agreement with Channahon. The village is working on placing areas around the Route 6 and Interstate 55 interchange in a new TIF district.
A TIF district is an area in which assessed property values are frozen at their current level. Tax money generated from the difference between the frozen value and current value of those properties goes into a special TIF fund to be used to improve properties in the district.
Part of the TIF income will be used to reimburse Bluestone, a development company, for rebuilding and realigning the Northwest frontage road around its development. Other TIF dollars would go toward construction on a portion of the overpass and other frontage road reconstruction needs such as lights.
The school district’s property tax dollars generated from the TIF district would be frozen at the base EAV of $3.4 million for 23 years. However, in the agreement between the village and the school, a percentage of those dollars would return to the school after six years.