Former Caterpillar plant qualifies for TIF district status, consultant tells Montgomery Village Board

The former Caterpillar plant off Route 31 near Montgomery “qualifies pretty easily” for designation as a Tax Increment Financing (TIF) district a consultant for the village of Montgomery told the Village Board Monday evening, Oct. 11.

Peter Iosue of Teska and Associates said the massive plant would qualify for TIF district status under state law as a blighted area.

Iosue said if the board wishes to move forward and designate the plant a TIF district the next step would be to create a Joint Review Board and hold a public hearing over the TIF district proposal. The Joint Review Board would be comprised of representatives from other local taxing districts that would be affected by the creation of the TIF district. The plant site is located in Kendall County and within the boundaries of Oswego School District 308.

Reich Brothers Inc., a White Plains, New York-based firm that specializes in redeveloping industrial properties, purchased the 4 million-square-foot plant from the heavy equipment manufacturer for $68.5 million in March 2020 and is seeking to annex the 350-acre plant site to the village.

Reich Brothers has renamed the property “The Grid” and is marketing it as an industrial park to new industrial tenants.

Reich Brothers has asked the village to designate the property as a TIF district as part of its effort to redevelop and market the site to multiple new industrial tenants.

Responding to Reich Brothers’ annexation and TIF district request, the Village Board in April voted to retain Teska Associates, at a cost not to exceed $23,000, to complete its study to determine if the Caterpillar site meets the criteria under state law for TIF district designation.

If the plant is annexed to the village and designated a TIF district, its assessed value would be frozen at a base level for up to 23 years. Reich Brothers would continue to pay property taxes to local taxing districts at that base assessment level. However, any assessment increases on the property beyond the base level during that same period of up to 23 years would be placed in a TIF fund that would be administered by the village and used to pay for improvements to the plant site.

In a letter to Village President Matt Brolley earlier this year, Bernard Citron, an attorney for the property owners, noted his clients are seeking TIF district status for the plant in order to rehab and reposition the 60-year-old facility “into a modern industrial development” that will house multiple tenants involved in industrial manufacturing and distribution.

Citron said his clients estimate the potential TIF-eligible expenses on the plant site at about $50 million.

“Due to the Illinois property tax structure, there is a need for TIF incentives to balance the cost of improvements and the rental structure available on the campus [plant site],” Citron said.