The Springfield City Council signaled last night that they were pulling the plug on the Bright New Day redevelopment project. Led by Rick Lawrence, Bright New Day was trying to redevelop the properties at 518, 520, and 524 E. Monroe Street. However, after years issues and delays, the city has withdrawn its TIF funds from the project. Both the city and developers said that without the TIF funds, the project will likely collapse.
Bright New Day was a substantial undertaking in terms of scope, funding, and complexity. The plan was to renovate three downtown buildings and bring them back into productive use. Actually accomplishing this would require millions in funding. Commonly referred to at the “three legged stool,” Lawrence was relying on private financing, various state tax credits, and TIF money from the city. Corporation Council for the city frequently mentioned this project was incredibly complex.
But as is so often the case with complex projects, there were serious problems and delays. In the end, Lawrence missed several of the contractual deadlines he had with the city. By missing these deadlines and not getting extensions from the city, the project lost access to its TIF funds. These deadlines form the heart of the issue that was discussed last night.
The final debate
The discussion at last night’s city council meeting was full of sound and fury. Mayor Langfelder and Alderman McMenamin defended giving Lawrence more time, and not to rescind the TIF money yet. They were joined by several community members who spoke to Mr. Lawrence’s good character. They argued that by rescinding the money, it would send a chilling message to future development. No TIF money was actually paid out to the project so far. However, because the TIF money had been appropriated, it was not available for other projects. More practically, Langfelder pointed out that a foreclosure process would take more than the 90 days Lawrence was asking for to get a new lender.
There was plenty of opposition as well. Other aldermen said that this project was something they supported in theory. But they said that this project should be treated the same as any other project, and the city had been more than accommodating with the delays and other issues arising from the project.
Unions that had worked on the project also spoke out against it. They cited a long list of grievances including not being paid their proper benefits. According to Alderman Hanauer, this was very surprising because by canceling the city’s support, they might not get paid at all. However, the union representatives said that they were unsure any amount of money to Mr. Lawrence would ensure they got paid.
In the end, the impassioned speeches signified nothing. This ordinance is mostly symbolic. It was repeatedly noted that the agreement between the city and Bright New Day had expired and was unfulfilled on Lawrence’s part. Any outcome on this ordinance would have had a very similar practical outcome. It did pass 8-1-1.
What comes next
The future is dim for the Bright New Day redevelopment. As Alderman Theilen explained after the meeting, what this move really does is prevent there from being another extension to the original redevelopment agreement with the city. Because that agreement had already expired, Lawrence had already lost his immediate access to the TIF dollars. Although he said he was making progress with another lender, Theilen pointed out that lender would have to know Lawrence did not have the TIF dollars he thought he did.
But while things look down for the Bright New Day project, it may not be over. None of the aldermen spoke out against the project in theory, and all of them are for downtown development. If the new lender comes through, it is very likely that new a TIF deal could be reached with the city.
You can watch the full debate in the player above.
U.S. Supreme Court ruling on internet sales tax will likely mean consumers pay more
Illinois consumers can expect to pay more when shopping online after the U.S. Supreme Court ruled that states have the authority to require out-of-state online retailers to collect sales taxes.
In a 5-4 decision in South Dakota vs. Wayfair Inc., the court ruled states can require sellers to collect sales taxes even when the seller has no physical presence in the state. The court sided with the government. Concurring with the majority opinion, new Justice Neil Gorsuch wrote that the ruling is meant to “rightly end the paradox of condemning interstate discrimination in the national economy while promoting it ourselves.”
Chief Justice John Roberts dissented.
“Any alteration to those rules with the potential to disrupt the development of such a critical segment of the economy should be undertaken by Congress,” he wrote.
Illinois already requires consumers to self-report sales taxes for online sales. The ruling shifts that burden to sellers.
Michael Leonard, a tax professional based in Oak Park, Illinois, said he knows of virtually no one who self reports online purchases on tax filings. He said the ruling could put small businesses that sell online in a bind.
“Now that’s going to be implemented on the internet and paying the sales tax, now you’ve got to employ and accountant, there’s more money involved, you’ve got to pay tax, it’s gonna make them not want to do it, of course,” Leonard said.
Small businesses can’t navigate the different rules of the 10,000 taxing bodies across the country, said Jessica Melugin, associate director of the Center for Technology & Innovation at the Competitive Enterprise Institute. She said the ruling is a tax increase for consumers.
“The whole point of this whole exercise from states and localities is to get more tax money in their coffers so that’s going to come out of consumers’ pocket books,” Melugin said.
The Illinois Department of Revenue also praised the ruling, estimating it will bring in $200 million to state coffers annually.
“To be clear, this is not a new tax. Illinois residents are already obligated to pay a Use Tax on out-of-state purchases and this prudent decision will allow states the ability to enforce Use Tax laws that are already in existence,” revenue department spokesman Terry Horstman said in an email. “With this decision, we level the playing field for Illinois brick and mortar retailers.”
The high court’s ruling was cheered by brick-and-mortar retailers that have complained that online sellers had a tax advantage. The decision also was welcomed by Illinois municipalities, said Bill McCarty, Springfield’s budget director.
“This will provide a little bit of a cushion, but more importantly it provides a stepping stone we need to eventually bring those tax dollars home, which is where we need to get to,” he said.
McCarty said the ruling could mean Springfield will get an estimated $300,000 from the state, which hands out state sales taxes to municipalities on a per capita basis.
Illinois Retail Merchants Association President Rob Karr said the ruling is a win for his 20,000 members.
“This simplifies life for retailers and for consumers and it levels the playing field for retailers and their internet competitors,” Karr said.
“All eyes will now shift to Congress and the states,” the nonpartisan Tax Foundation said in an email. “One thing that will be important to remember as states look to grapple with today’s decision: This ruling is not a blank check. The Court specifically observed that South Dakota’s law, and its tax laws generally, minimizes the burden on interstate commerce. Other states should craft their laws accordingly.”
Article by Greg Bishop, Illinois News Network. For more INN News visit ILnews.org
Property owners weigh in on Jacksonville historic districts
The Jacksonville Historic Preservation Commission wants to create two historic districts in the downtown area. Their efforts to get on the National Register of Historic Places are almost complete, and the city council has been asked to support a new Local Landmark district. Only one potential hurdle remains: winning over the downtown property owners. Wednesday night, the Commission held a public hearing to help inform them what the districts would mean for their properties, and answer questions and take feedback from them.
Cody Right, a consultant for Jacksonville Main Street, started the meeting with a presentation explaining the history of the proposal, and how the districts work. Initially there were supposed to be two meeting scheduled, but they covered much of the same material and so were combined in the interest of time.
The Two Districts
Although they appear similar, the National Register and the Local Landmark District do different things. By having a property in the National Register, property owners can get generous tax credits for approved renovation projects. If the project meets the correct requirements, the owner can get a 20 percent tax credit for the cost of the project. However, the register offer virtually no restrictions if the tax credits are not sought. State agencies have already approved the district for the register, and it is likely to go through in the near future. Still, the Preservation Commission is seeking a resolution of support from the City Council to further strengthen their application.
Creating a Local Landmark district is far more impactful for property owners. This district is created by local ordinance, and can be done with or without the National Register designation. If approved, it would create guidelines for how the appearance of historically significant buildings can be changed. To the greatest extent possible, buildings would need to retain their original styles on facades that face a street. This includes walls which were originally hidden by other structures that have since been demolished.
Both districts only apply to the exterior of the buildings. The insides can be updated and reconfigured to suit the needs of the current owners.
Business owners were skeptical of any measure which might add additional regulatory burdens. Many of the owners who attended the meeting stated that they had not been well informed that the Commission was attempting to create these districts. One man stated plainly that he felt as a property owner, he should have the right to modify his property as he saw fit. He also was concerned that while the National Register offers no restriction today, that new restrictions might be added in the future.
Members of the Historic Preservation Commission worked to put these fears to rest. They explained that while the Commission has rules and standards, they know that every project is different. The limitations of the building itself as wells the financial considerations, all go in to making a final recommendation. As Steve Hochstadt said,” the members of the commission are your neighbors.” There is already a residential historic district in Jacksonville, and few projects are rejected outright. If a project is rejected, owners can still petition the city council for approval. He went on to invite some of the property owners to join the Commission.
Even if the Local Landmark district is created, local building standards for the district will still need to be drafted. Jacksonville Main Street Executive Director Judy Tighe said that some restrictions might actually be loosened in the new standards.
The two districts are scheduled to be discussed at the next Jacksonville City Council meeting. It will start at 6:00 PM on Monday, June 25th, in the Municipal Building, located at 200 West Douglas, Jacksonville. You can watch the full meeting in the player above, or read the National Register and Local Landmark Historic Districts application and FAQ.
White Oaks Mall remains confident after anchor losses
White Oaks Mall is a very important location in Springfield. While consumers may see it as a hub for shopping and recreation, the mall is also critical for the city’s finances. The mall is one of the largest tax generators in the whole region, both in terms of property and sales taxes. Since Springfield is heavily reliant on local sales tax, city leaders like to keep a close eye on the mall’s health.
So when two of the anchors in the mall announced they were closing, there was reason to be concerned. Both the Bergner’s and Sears will be closing this year. Sears had been in financial trouble for some time, but the loss Bergener’s was unexpected. City revenues were already stagnate; losing the mall could be devastating to an already precarious budget.
But these fears were somewhat allayed at last night’s Committee of the Whole meeting. Mall manger Clay Emerich spoke the council about the state of the mall. Not only did Mr. Emerich state that the mall was not planning to close, he pointed to the opportunities these closing present. Most of the mall is owned by Simon Property Group, but they did not own the two anchor locations. Simon potentially having access to far more space in the mall presents a number of options which are still being explored.
Emerich explained some of these future possibilities. Adding more entertainment options to balance out apparel was one. Other stores are already moving into the mall area, including a Pasta House that will replace the old Denny’s. He also stressed that malls across the region have taken hits of late. Their loss might be Springfield’s gain, if Simon can execute some of the strategies they are working on.
You can watch the full presentation in the player.
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