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Riverside Info » About Riverside

1. KimJ
   Member

   http://s93980653.onlinehome.us/Draft-IncrementalRevenueEstimates.pdf

   September 13, 2005

   To: Katy Rush,VillageManager

   Krista Kahle, AICP

   DRAFT Incremental Revenue Estimates---DISCUSSION PURPOSES ONLY

   URS has prepared preliminary estimates of incremental property tax revenues that could be associated with the development potential for the Downtown Riverside Transit-Oriented Development Project Area. The potential development program we tested is comprised of the following: . Approximately 70-100 owner-occupied condominium units will be built. For purposes of this analysis, 70 units were used, with an average sale price of $400,OOO/unit.

   Approximately 45,000 square feet of new retail/commercial space will be constructed
   and will be valued at $1OO.OO/square foot.

   A new hotel facility with 20 rooms valued at $120,000 per room will be built.

   The proposed Project Area is generally bounded by West Avenue on the west, North Cowley
   Road on the east, the Des Plaines River on the south, and Longcommon Avenue on the
   north. The assumptions utilized in generating estimates of incremental property taxes for the Project Area are explained below, followed by two tables that present the estimates in more detail.
   The preliminary estimates of incremental property tax revenues are based on the following assumptions:

   1. Schedule: Construction of the residential and retail project(s)is assumed to begin in early 2007 and to be complete and fully occupied by the end of 2015. The hotel facility is assumed to begin construction in 2008 and be fully occupied by 2011.

   2. Project Site: The Project(s) will be constructed on numerous sites on existing tax parcels, all within the Downtown Riverside Transit-Oriented Development Project Area.

   3. Initial Equalized Assessed Valuation ("Base EAV"): The 2003 EAVof parcels within the Downtown Riverside Transit-Oriented Development Project Area is estimated at $12,267,345.

   DRAFT- ONLY DRAFT-FOR DISCUSSION PURPOSES ONLY

   URS Page2 of 3
   ..
   4. Valuation: Based on conclusions drawn in the Draft Market Analysis for the Riverside
   TOD and research on comparable developments in nearby communities, the following fair market values(FMV)were used:

   a. $400,000 per individual condominium unit

   b. $100 per square foot for new retail development

   c. $120,000 per hotel room

   URS assumes the quality and nature of construction to be similar to the comparables.
   However, differences in size, quantity or quality of the improvements may result in
   different FMVs per unit.

   This model assumes that 100% of the for-sale units will receive the Homeowner's
   Exemption and 10% of the for-sale units receive the Senior's Exemption.

   5. Equalization Factor: The 2003 state equalization factor for Cook County was 2.4598. For purposes of estimating future EAV of the Project Area, an equalization factor of 2.4598 is used in all years.

   6. Tax Rate: The 2003 assessmentyear tax rate for the applicable tax codes in the ProjectArea was 8.341%. For purposes of estimating future tax incremental project taxes generated by the Project Area, a tax rate of 8.341% is used in all future years. The estimated tax rate does not incorporate any adjustment for the possible impact of the property tax limitation act or any other legislative action that may affect future taxes.

   7. Valuation Growth. This estimate assumes a 2.0% per annum increase in the FMV of the Project.

   8. Life of the TIF. A downtown Riverside TIF is assumed to be adopted in 2006 and would expire no later than December 31, 2030. A collection rate of 98% is assumed throughout the life of the TIF.

   FINDINGS

   In summary, incremental property taxes to be generated and collected by the Project Area are estimated to total approximately $15-19 million during the period ending in 2029.

   IMPORTANT NOTES
   The Cook County Clerk calculates incremental property tax revenues for tax increment financing ("TIF) redevelopment projects by aggregating EAV at the tax code level. As a result, incremental property tax revenues exist only in years when the EAV of a tax code exceeds the "Certified Base EAV" of that of the tax code. These preliminary estimates of incremental property tax revenue reflect the estimated impact of the Project only on the parcels upon which it is proposed to be .. located and are based in the assumption that the total EAV of the remaining property within the
   tax doe to which the Project is assigned will be higher than the respective Certified Base EAV for that tax code. If the total EAV of the remaining property within the tax code to which the Project Area is assigned were to fall below the respective Certified Base EAV for that tax code, any increase in EAV associated with the completion of the Project could be reduced or eliminated.

   This memorandum contains preliminary estimates prepared by URS. These preliminary estimated are for discussion purposes only are to assist the Client in assessing the amount of property tax increment revenue that may be available. These preliminary estimates are not intended to provide the basis for the Village or any other party for the structuring or marketing of bonds of other obligations.In the event of such an effort, additional due diligence would be required to assure the Village, prospective bond purchasers and other parties that the estimates are fair, accurate, and do not overlook a material fact that may affect the estimates.

   cc: File

   Posted Sunday Apr 1, 2007 18:31 #

2. Wilkins
   Member

   Okay, I'll bite on this one.

   You may be able to attach $15 million dollars to a hook and reel in some people; but, that won't work in a neighborhood with a large number of highly educated professionals.

   First, of all where will that $15 million dollars go? How much of that will go into the pockets of the developers? How much of that will go to the side agreements that we have to forge to return the money we took from the schools? How much of that will go toward professional fees?

   Second, here are two quotes from http://en.wikipedia.org/wiki/Product_bundling on Product Bundling.
   “Product bundling is a marketing strategy that involves offering several products for sale as one combined product.—

   “In oligopolistic and monopolistic industries, product bundling can be seen as an unfair use of market power because it limits the choices available to the consumer.—

   How come we only have one bundle to choose from? I don't make an investment without comparing it to my alternatives. What about the 40 + new units (49 new units —“ some number of existing units that were demolished) that are either in construction or on the drawing boards? Why aren't we looking at a financial projection there for comparison?

   And considering that we have 49 new units on the drawing board, where are the projections for a scenario where we do nothing and let market forces add more units in the same TIF zone?

   Third, what we really need to look at is not a one-time hit, but how much you and I will get in return for selling our downtown after the one-time hit is long gone.

   Here is an extremely unscientific starting point in today's dollars for people to pick apart and make more realistic:

   $4,000 in annual taxes from one $400,000 condo

   X 70 condos

   = $280,000 a year

   / approximately 3,500 housing units in Riverside

   = $80 a year reduction in everyone's tax bill.

   Would I like to sell our downtown for one unknown lump sum ($15 million minus the expenditures that are conveniently missing), to save $80 a year on my tax bill? I don't even need to look at alternatives to answer this one. NO.

   Posted Sunday Apr 1, 2007 19:53 #

3. Elisa
   Member

   In reading very briefly through this letter, the first thing that jumps out at me is the date of September 2005. When you compare a village trustee's complaint that no minds were changed as a result of the workshops with the date of this memo, it really seems as if some minds were made up 1.5 years ago. Everything else has just been a way to get to the final goal. Are all of the concerns of the citizens, all of the information about how to finance improvements to the CBD in a creative manner, all of the opinions and alternative ideas and yes, even the workshops themselves, for nothing?

   Posted Sunday Apr 1, 2007 20:03 #

4. spatny
   Member

   Wilkins and Elisa - Aha - the lightbulb comes on! This is the salami they were sold back when they crowed about getting the money from Metra/RTA for the TOD Study. They never expected to have to slice it as thinly as it now appears they will have to, vis-a-vis the schools. But it's the same recipe for disaster. It's still three to four more VC size buildings full of condos downtown, with an accompanying parking structure. One would think people would be outraged to see this, but for that we'll have to wait and see. And of course, the consultants that sold them this lemon will be around to participate in the next one. On to Harlem is their cry. It isn't often you get to skin the same cat twice. This is the scenario that enthralled them, that they spent our money on, and now how will they back away? Pitchforks won't be enough.

   Posted Sunday Apr 1, 2007 20:53 #

5. MikeT
   Member

   I thought that the reason we were doing the TIF was wake up or spruce up our 'tired' downtown.
   http://www.riversideinfo.org/forum/topic.php?id=280&page&replies=9#post-4269

   This document seems to suggest that a big reason is for new revenue to the Village.

   In case you came in later to this debate, this is important for the following reasons:

   * as we are about go on the path to enact the TIF, there is a lack of clarity on WHY we are doing the TIF - is it for the beautification of the downtown or is it for money to the Village? Don't you think that the public should be clear on WHY it is doing the TIF before undertaking it?

   *Are the plans contained in this memo, of a 100 condos on top of the 22 already being developed currently, as well as a parking deck, a good thing for the Village of Riverside to undertake?

   --Will it be detrimental to the look and to the feel of this town?

   --Will you get the feeling of congestion in the greatest amount of open public space in the town, arguably the summation or the central focal point of the gentle meanderings of the streets?

   Posted Monday Apr 2, 2007 12:58 #

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