TIF attorney: 'We still have an assessment problem'

PAXTON — Unless the Ford County supervisor of assessments decides to raise properties’ assessed values to better reflect what they are actually worth, the city of Paxton could end up having trouble reimbursing landowners for improvements they have made to their properties in the city’s tax-increment financing (TIF) district, an attorney warned the city council last month.

The city’s TIF attorney, Dan Schuering of Springfield, said he and the mayor have been urging Supervisor of Assessments Patricia Langland to increase the assessments for improved properties in the TIF district, but with little success.

The city wants property values in the TIF district to increase, in particular, because higher values mean more property tax revenue that can be used to reimburse property owners for improving their land. The city already has a number of redevelopment agreements in place, requiring the city to reimburse property owners using tax increment generated through property improvements; however, city officials are becoming worried that they won’t be able to fulfill their end of the deal if enough funds are not generated through the TIF district.

Just in the past year, Schuering said, about $630,000 in improvements were made to Shields Automart in Paxton, yet the property’s assessed value only rose about $50,000, with the supervisor of assessments assigning the property a new fair market value of only about $255,000.

Meanwhile, during next Tuesday’s meeting, the city council is preparing to approve a redevelopment agreement with Shields that would require the city to reimburse the auto dealership. 

Unless the assessments change, Schuering remains concerned that the city will be unable to do fulfill its obligations.

“The property, unfortunately, illustrates that we still have an assessment problem,” Schuering told the council last month.

“The mayor and I have been encouraging the assessor and the county to re-assess, particularly, commercial properties and, particularly, properties where we can demonstrate a significant improvement,” he continued. “What we can’t get this assessor to do is even look at the construction (cost) numbers that we give to them (to show how much money was spent to improve a property). ... We still have a problem.”

Schuering said that unless things change, the agreement with Shields would not be the only one affected. Schuering noted that aldermen are also expected to approve a redevelopment agreement next Tuesday with the owners of Nexstep Commercial Products, who have made $700,000 in improvements to their building on Illinois 9 on the city’s west side. Those improvements should increase the building’s assessed value by about $200,000, but it remains to be seen whether that actually happens, Schuering said.

“It is important ... that we are able to generate the taxes to repay them according to the agreement,” Schuering said. “But if we don’t get the right assessments out of the county — even if they’re not on a dollar-for-dollar basis — we’re not holding up our end of the bargain, and that will catch up with the city over a period of years. It will catch up over time.

“So we have to continue encouraging the county to critically look at these assessments and get the assessments in line with what the real fair market value of the building is.”

Alderman Bill Wylie said that when he and other city officials met with the Ford County Board to discuss the situation, he felt as if “they didn’t have a clue what we were trying to tell them.” Wylie asked Schuering if he got the same impression.

Schuering said that, yes, he did get that same feeling. Schuering noted that although no one should expect assessments, in a rural county like Ford, to always reflect a full third of a property’s fair market value, it should be expected that the assessments be “closer than they are.”

“When you’ve got a building that was purchased for $200,000 and you put $600,000 in hard improvements into it, the building on the fair market is worth more than $250,000,” Schuering said as an example, referring to the Shields Automart property. “We’re all ham-strung if we can’t get the assessments where they belong ... because right now, unless we get the Shields assessment changed, if we agree to reimburse them $600,000, we won’t even make $300,000 in the remaining life of the TIF.”

Mayor Bill Ingold said the assessment problem also could end up affecting Paxton-Buckley-Loda schools if not addressed. The city has an agreement with the school district to provide some TIF money for various projects the district would like to pursue.

“The sooner we meet certain benchmarks (for the TIF district), particularly in the commercial area (eyed for development), the quicker we’re going to be writing checks from the TIF back to the schools to help them get some things done,” Schuering said. “And they’ve got a pretty lengthy list.”

Alderman Rob Steiger asked Schuering what else the city could do to address the issue.

“The city, the taxing bodies, the citizenry have got to keep the pressure up on the county and the county assessor,” Schuering responded. “We’ve got to get this right.”

Also, Schuering continued, “in every redevelopment agreement that we sign, when you approve the costs (for a project), I’m going to work with the (city) clerk and we’re going to send a certified copy of those approved costs to the assessor and say, ‘Please re-assess the building.’ There’s also a form (in the assessor’s office) that a property owner can sign asking for a re-assessment of their property, and we’re requiring that now, too.

“I’m not sure what else we can do, other than get into the formal appeal process. That would just get horribly messy and expensive.”

In addition to the redevelopment agreements with Shields Automart and Nexstep Commercial Products, aldermen were also told to be prepared to approve next week a list of reimbursable expenses for the construction of the Cobblestone Hotel & Suites on Illinois 9. Up to $700,000 in expenses are eligible for reimbursement under a redevelopment agreement the city previously approved.

“We have not received a tabulation of the expenses yet from the construction  manager, but we expect to have that for you to approve,” Schuering told aldermen in November. “Once those expenses are approved — whatever the final amount is — then all (Cobblestone) will have to do on an annual basis is demonstrate that they’ve paid their real estate taxes and they’ll be eligible for their reimbursement.”

Also next week, the council is expected to be presented with what Schuering referred to as an “interim proposal” for improvements made to the exterior of the Paxton Packing LLC beef-jerky plant at the intersection of Taft and State streets.

“They have several national companies either here or coming here to see the plant for possible partnership arrangements, and they want to get the building whipped into shape,” Schuering told the council.

The council meets at 7 p.m. Tuesday at City Hall, 145 S. Market St. The meeting is open to the public.


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