Ottawa Elementary signs agreement with city on downtown TIF extension

Agreement sets limit for schools' impact fee reductions

After some negotiating between the city of Ottawa and the Ottawa Elementary School District, the city’s downtown tax increment financing (TIF) district is likely to be extended an additional 12 years.

The Ottawa Elementary School board approved an agreement with the city at a special meeting Monday, and the city placed the agreement on file during its Tuesday meeting to be voted on at a future council meeting.

OES Superintendent Cleve Threadgill said the agreement came after a "cordial" exchange of ideas and negotiation between the two parties to extend the TIF district to 2034.

As an incentive to extend the TIF, the city originally offered 50% of the taxes the school district would have received if the TIF district had expired.

After the agreement, the district will additionally receive a rebate from the city equal to 30% of the district's annual operating tax rate multiplied by any equalized assessed value increase of parcels in the TIF district.

Additionally, the agreement limits the city from reducing the schools' portion of impact fees no less than 75% and limits the city from providing TIF assistance to residential units exceeding eight individual units, except for senior living facilities. Threadgill said the city can renegotiate the limit on residential units later if needed.

The negotiations began when the city looked to extend the TIF district but needed letters of support from all associated taxing bodies to send to the Illinois General Assembly.

The city received support from Ottawa High School and Illinois Valley Community College, but Ottawa Elementary School District wanted to further discuss the issue.

"While the downtown was in need of improvements, as they've taken place we went through some tough times financially," Threadgill said.

Threadgill said the agreement was a sign the city recognized what the district had been through and was willing to compensate the district accordingly.

Mayor Dan Aussem said to media following the City Council meeting that the reduction of impact fees only include those given to the schools and not the city.

Once approved by the city, they can apply to have the TIF district extended.

Commissioner: Reduction in impact fees could lead to development

One of the items agreed upon was a talking point before the negotiations began.

Last year, Commissioner Tom Ganiere suggested the city look into reducing or eliminating impact fees to spur new residential growth.

Those fees are charged to a developer when developing a new subdivision to help offset the costs associated with an increased number of residents to the nearby schools and parks. For the schools, they're given to help care for an increased number of students.

Threadgill spoke to the City Council last year and said the district would need those fees should a subdivision greatly increase their students with no additional money to make capital improvements.

Ganiere said to The Times after Tuesday night's meeting that while his proposal would have limited the impact fees to the schools by 50%, the new agreement should be just as enticing to developers as the city can still reduce its impact fees to nearly zero.

"I hope so," Ganiere said. "We've got some developers that are waiting for it. I know that."

The city's fees usually can be put toward improving parks as well as water and sewer connections. He estimated that with the new agreement, a developer could save $2,500 to $3,000 per lot when developing a new subdivision.

Now that the city has an agreement with the district, he expects that conversation could continue in the next month or two after the agreement has been voted on.