RACINE — When plans were announced this spring to transform a 20-acre swath of Downtown riverfront with a $65 million commercial-residential development, public officials noted that the project would require a great deal of public investment.
In addition to applying for historic tax credits, and all manner of grants, City of Racine administration officials and development staff said they would seek the creation of a tax increment finance district to help provide funding for necessary improvements in the area, dubbed Machinery Row.
On Tuesday, the City Council voted 13-0 to grant the administration’s request, approving the creation of Tax Increment Finance District 18. The vote is another step toward making the Machinery Row phase of the Root River Corridor Redevelopment Plan, called RootWorks, a reality.
Spanning 42 acres along Water Street, the TIF district will allow the city to funnel “increment” — property tax generated on new developments in the district — into a pot that can be used to help pay for improvements, like private developments, environmental cleanups, road construction and demolition projects. The city currently has 11 active TIF districts. TIF 18 will bring that number to 12.
The 20-acre redevelopment area for which Davenport, Iowa, developer Financial District Properties has an option to buy is located at the center of the TIF district on the southern bank of the Root River.
Located north of Water Street and east of Marquette Street, the area encompasses all of Azarian Marina, 726 Water St., and two large former industrial buildings constructed by J.I. Case Co. between 1908 and 1915. They were later sold to Western Printing and now have two different owners.
Although the $9 million in historic tax credits that the developers netted for the project in late June have received a great deal of attention, city officials have noted that a TIF is necessary.
“Due to extensive investment required, the City has determined that redevelopment of the area will not occur solely as a result of private investment,” states a project plan drafted by public finance firm Ehlers. “The City finds that absent the use of (a) TIF, redevelopment of the area is unlikely to occur.”
That city’s plan for the TIF district anticipates expenditures of approximately $30.5 million for priority projects over the next two years, including street extensions, river bank improvements and the construction of a promenade. There could also be an additional $16.4 million for contingent projects, but those would only be undertaken if the tax increment generated exceeds levels anticipated.
The city could start collecting the tax increment on Jan. 1, 2016, explained the city’s Assistant Director of City Development Matt Sadowski, but only if there is actual tax increment being generated by that point.
Although the city is currently in the beginning stages of a development agreement with FDP, Todd Taves, a senior financial adviser with Ehlers, explained to aldermen that by approving the creation of the TIF they were not approving a development deal.
“This does not approve any development projects; it just puts the taxing infrastructure in place that allows you to collect the increment as those projects occur,” Taves said.