By CARL WALWORTH City Editor

MATTOON -The City Council endorsed a feasibility study of tax incentives for a proposed development at a meeting Tuesday in which members were asked to keep open mind about project details, including the scope. 

After about two hours of discussion, the council voted 5-0 to have Ehlers and Associates assess whether property south of Illinois Route 16 and west of the Lerna Road qualifies for a Tax Increment Financing district. The council also directed City Attorney John Hefner to work on an agreement with developer Agracel Inc. of Effingham.

City Administrator Richard Underkofler suggested the council consider expanding the project's scope and altering the city's role. As a possibility, he said the city could look at a TIF district that would include all of the 235 acres in which Agracel is the managing partner plus additional adjacent acreage.

Underkofler suggested the TIF district could generate money to pay for the necessary public infrastructure for commercial development that could lead to attracting new companies with good-paying jobs. In that scenario, the city might not own the new convention center, but instead would benefit from the water , sewer and streets necessary to spur commercial/industrial development for many years.

"A way to get out of a financial problem is to grow the tax base rather than raising taxes," Underkofler said. 

In an interview after the meeting, he said his suggestion is just that, something to consider. The original proposal from Agracel is very much on the table, as are any number of variations that could develop during the study.

Underkofler said he's suggesting the council think long term rather than be limited to a single, site-specific project. "I'm not sure I want to own a convention center," he said. "I don't know if they make any money. "

Underkofler first raised the issue with department heads who discussed the infrastructure needs of the area at a meeting Tuesday morning. In a TIF district, the real estate tax base is frozen at current levels for taxing bodies in the area. Once buildings are constructed within the district, the taxes from the additional assessed valuation, or the increment, go into the city's TIF district fund. The city then may use that money for infrastructure development in the district.

Step one is to determine whether the area qualifies for a TIF district. Beth Ruyle of Ehlers and Associates is to complete that study, probably in the next month, with Coles Together, paying for the study.

The key issue, Ruyle said, is whether the area is in the flood plain. If it is, she said it likely will qualify provided the land is platted as a subdivision, not farmland. The area certainly wouldn't qualify as "blighted" and probably wouldn't qualify under other provisions of the TIF guidelines.

The council also heard from Jeanne Gustafson, the executive director of the Coles Together economic development group, and 'Kurt Froehlich, a lawyer who specializes in bond sales.

"One comment we hear repeatedly (in Coles County) is the need for a convention center," Gustafson said.

John McHugh, whose company owns four existing Coles County hotels, asked some questions. The council agreed that McHugh could present results of his study on the impact on his hotels at the Feb. 5 meeting.

Gustafson said she called hotel owners in Tinley Park where a similar convention center has been developed. Those hotels reported that while some fought the idea in the development stage that they've found either a positive impact or no impact on their business.

The Agracel proposal is to construct a privately owned hotel and an adjacent convention center that would be operated privately but owned by the city. The city would repay bonds for the convention center construction through the TIF district.

Schultz said projections are that in the third year the center would host about 275 events a year , including trade and business association meetings or reptile shows, for example. Schultz gave the council an overview of the business plan, saying that projected annual revenue increases from $3.4 million to $5.5 million from 2003 to 2012. He said the estimated return is about 8 percent, which he called low, but in this case acceptable because of the potential for more development.

The hotel/convention center would add from 100 to 120 jobs, he said.

Contact Carl Walworth at cwalworth@jg-tc.com

Used with permission from Mid-Illinois Newspapers
Publishers of the Mattoon Journal Gazette and the Charleston Times-Courier