Tag Archives: OSF

East Bluff, OSF St. Francis, TIF

Public skeptical of East Village plans

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The Journal Star covered the public meeting Monday night on the proposed East Village TIF. They report that most people were concerned about eminent domain being used the way it was in the MidTown Plaza TIF. Also, this:

Other concerns expressed by residents focused on what type of development OSF Saint Francis Medical Center, which is also included within the TIF district’s boundaries, might have.

Sue Wozniak, the hospital’s chief operating officer, said there are no specific projects planned. She said in the future, the hospital would be supportive of developing privately owned medical offices that would help generate taxes that would go toward paying public projects – such as sidewalks and road repairs – within the district.

With all due respect, I find this very difficult to believe. OSF is spearheading this effort to establish the East Village TIF. You’re telling me they have no specific plans to take advantage of this TIF once it’s established? Really? This is just a shot in the dark for OSF?

In July, Ron Jost, Vice President of Strategic and Facility Planning for OSF St. Francis Medical Center, was interviewed on WCBU’s “Outside the Horseshoe” program.

Finally, [Jost] explained that OSF is looking at further expansion. Specifically, they’ve acquired the White School and Irving School buildings from District 150, and they’re planning to build a 100,000-200,000 square foot building to house a simulation/conference center for training purposes. They’d like to expand south of Greenleaf Street. Jost also said they would be interested in seeing if there are “other parties” who would be willing to develop and provide housing that could replace OSF’s current dormitory.

Those sound like specific plans to me. They know the location they want to expand, they know what they want built, and they’re looking for an interested developer. Why doesn’t Wozniak just level with the neighbors like Jost did?

City of Peoria, East Bluff, TIF

East Village TIF report raises questions

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The East Village Growth Cell TIF District Redevelopment Plan and Program report by City consultant Teska Associates was published last week on the EastVillagePeoria.com website. I read the report over the weekend and observed the following:

  • The report frequently made reference to the City’s updated (2010) Comprehensive Plan, which has only been published in draft form and has yet to be adopted by the City Council. In contrast, the report never once mentioned the Heart of Peoria Plan, which was completed in 2002, adopted by the City Council “in principle,” and forms the basis for the City’s Land Development Code which governs the East Bluff and near north side. I wonder if the City even provided a copy to Teska Associates. (Incidentally, the City has allowed its registration of the URL “heartofpeoria.com” to lapse, so information on the Heart of Peoria Plan, including the Plan document, is no longer available online from the City.)

  • The report does a good job of documenting just how much the City has neglected the so-called East Village area. Here you will find how many streets and sidewalks have been inadequately maintained, how codes have not been enforced and properties have been allowed to fall into egregious states of dilapidation — with pictures! The report concludes that the East Village qualifies as a “blighted” area, just as the City found 11 years ago when the MidTown Plaza TIF was adopted.

  • The cost to improve infrastructure in the East Village area (which is “generally south of McClure, east of Knoxville, North of Interstate 74, and west of a variable boundary formed by Wayne, Glen Oak, Ravine, and Glen Oak Park,” and includes the near north side) is estimated at just under $42.6 million. That would include streets, sidewalks, driveways, gutters, curbs, streetlights, inlets, combined sanitary and storm sewer improvements (which alone account for $13.3 million of the total), ramps, and street trees. This is significantly less than the $55 million that was recently spent to expand the Civic Center, and only slightly more than the City plans to spend on the Wonderful Development (downtown hotel). If you isolate the cost of improving the streets and sidewalks alone, it comes to about $9.8 million — only $800,000 more than the City plans to pay Gary Matthews as a developer’s fee to build the Wonderful Development.

  • The report includes typical biases against older homes and other structures. “Age of buildings” is one of the factors that qualifies the area as “blighted.” To wit:

    The characteristic of age presumes the existence of problems or limiting conditions resulting from normal and continuous use of structures and exposure to the elements over a period of many years. As a rule, older buildings typically exhibit more problems than buildings constructed in later years because of longer periods of active usage (wear and tear) and the impact of time, temperature and moisture. Additionally, older buildings tend not to be well suited for modern-day uses because of contemporary space and development standards.

    And how old does a building have to be to suffer these deleterious “problems” and “limiting conditions”? A whopping 35 years. That’s right, if a house is more than 35 years old, then it’s contributing to blight. Thus saith the State of Illinois.

  • The report suggests “improvements” that include things discouraged under the Heart of Peoria Plan, such as wider streets and more parking lots/decks.

  • If I’m reading this right, the proposed TIF doesn’t sound like it has much chance of being successful. The report says, “Upon the completion of anticipated redevelopment projects it is estimated that the equalized assessed valuation of real property within the Project Area will be in excess of $96 million” (p. 19). The initial EAV (2009) is listed as $49,626,980 (p. 19). So the increase, or increment (as in “tax increment financing”), would be a little over $46 million. If you take that increment, times the total property tax rate of 8.7548% (that includes the City of Peoria, airport authority, mass transit district, County, Library, Township, ICC, District 150, and Park District), it comes out to $4,059,865.15 in TIF revenue per year for the East Village area. Obviously, this is not a realistic number as the redevelopment projects would not be completed in year one, nor would the property value jump in year one. Nevertheless, let’s take this unrealistically high number at face value for the moment, and times it by the 23-year time span of a TIF district. That comes out to $93,376,898.60 (all in 2010 dollars, of course). The “estimated redevelopment project costs” are listed as $95,000,000 (table 2, p. 16), and include the aforementioned public improvements among other capital costs.

    As you can see, it appears by Teska’s estimates that there would not be enough money generated by the TIF to pay back even the principal on the project cotsts, let alone the interest on such a large investment. This disparity is not addressed specifically in the report. However, the report does list other “authorized sources” of funds to pay back bonds, including funds from adjacent TIF districts and the City’s general fund. It also states that, “the highest priority for the issuance of tax increment revenue obligations shall occur when the commitment is in place for private sector investment necessary to fund the amortization of such obligations,” and that leads me to the next observation.

  • The TIF is clearly designed to primarily benefit OSF St. Francis. This isn’t surprising, given that OSF is paying for the study. Two of the eight objectives for the TIF are OSF-specific: “Continue to work closely with OSF Saint Francis Medical Center to accommodate additional enhancements to their campus while ensuring continued compatibility with the surrounding neighborhood,” and “Provide for new housing opportunities within walking distance to major employers such as OSF Saint Francis Medical Center and other nearby employers in downtown Peoria” (p. 8).

    There are also nine (re)development opportunities listed, and four of them are OSF-specific: “Opportunities for additional retail and restaurant uses in proximity to the OSF Campus,” “Creation of additional high density housing opportunities within walking distance of the OSF St. Francis Medical Center, including potential apartments, townhomes, and/or condominiums,” “Continued improvements to the OSF St. Francis Medical Center consistent with their City-approved Official Development Plan, as amended from time to time,” and “Creation of retail opportunities along Spaulding Avenue, such as restaurants and convenience stores, accessible by nearby housing and the OSF hospital campus” (p. 10).

    The justification for this focus is given on page one: “OSF Saint Francis Medical Center is one of the City’s largest employers. Their new Milestone Building shows a major commitment to this neighborhood, as does their City approved Official Development Plan. The TIF will provide opportunities for the City to partner with OSF and other area employers to continue to reinvest in the East Village Growth Cell.”

    A building project alone does not show “commitment to [a] neighborhood.” What shows real commitment is an effort to work with residents to make any building project fit into the neighborhood such that it doesn’t have a harmful effect on surrounding properties. Last year, OSF requested and got approval to site an energy center immediately adjacent to single-family homes against the wishes and petitions of neighbors; they could have put it elsewhere in their institutional zone, but they didn’t want the view of their Milestone Building obstructed. This makes East Bluff residents question whether this TIF project is really going to be for the benefit of the entire East Village area, or if this large area is just being leveraged to make OSF’s expansion plans possible. Those are legitimate concerns that should be addressed before any TIF is approved.

  • The proposed Redevelopment Sites map (p. 12) shows most of the redevelopment happening around OSF.

  • The Existing Land Use map (p. 5) is riddled with inaccuracies. Several properties are incorrectly shown as being zoned Instutitional. For example, Children’s Home at 2130 Knoxville. Also, the East Bluff Neighborhood Housing Services property is shown as “Open Space.” There are lots of errors like this, which makes it difficult to compare current uses with proposed future uses reliably.

  • The report has this to say about the impact this TIF could have on District 150: “The creation of new residential units may increase the school aged population (although existing residential units in the Project Area may contain a small number of school aged children, who may leave the School District if such units are displaced). As permitted by the Act, a portion of Redevelopment Project Costs may be allocated toward capital and operating costs incurred by School District 150 which are made necessary by development as described in this Redevelopment Plan.” As mentioned in a previous observation, there’s not enough increment to pay for all the estimated redevelopment costs, so one wonders how this intervention could be accomplished.

Someone is bound to ask me if there’s anything I like about this plan. Not really. I like the idea that the City of Peoria would improve the public infrastructure. However, I think that maintaining public infrastructure is the City’s responsibility regardless. The City needn’t establish a TIF and take tax dollars away from other taxing bodies in order to fulfill their own responsibilities.

There is a public hearing on this plan tonight at 6 p.m. Per the public notice, “Monday, November 29, 2010 at 6:00 p.m., at the Glen Oak Community Center Library, 2100 N. Wisconsin Avenue, Peoria, Illinois, a meeting will be held to gather public comment on a proposed redevelopment plan and the designation of a proposed redevelopment project area to be known as the East Village Growth Cell Redevelopment Project Area, and the adoption of Tax Increment Allocation Financing (TIF) therefore.”

City of Peoria, East Bluff, OSF St. Francis

OSF planning more development; TIF will help

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On “Outside the Horseshoe” this week, WCBU News director Tanya Koonce interviewed Ron Jost, Vice President of Strategic and Facility Planning for OSF St. Francis Medical Center. You can hear a podcast of the show here.

The broadcast focused on the proposed East Village Growth Cell and Tax Increment Financing (TIF) District. OSF has offered to front the money for the required studies to establish a TIF. Koonce asked Jost why OSF would want to do that — what’s in it for them? Jost gave several reasons.

First, he emphasized that OSF itself is a “neighbor” in the East Bluff and Near North Side and, like any neighbor, they would like to see their property value increase and live in a safe, stable, viable neighborhood. He also said that, while the hospital is not-for-profit, there are “certain aspects” of their business that do not qualify for tax exemption, and they do pay about $1.1 million per year in property taxes.

Finally, he explained that OSF is looking at further expansion. Specifically, they’ve acquired the White School and Irving School buildings from District 150, and they’re planning to build a 100,000-200,000 square foot building to house a simulation/conference center for training purposes. They’d like to expand south of Greenleaf Street. Jost also said they would be interested in seeing if there are “other parties” who would be willing to develop and provide housing that could replace OSF’s current dormitory.

That last statement explains why OSF would be especially interested in establishing a TIF. Developers would be unlikely to redevelop this area without tax incentives.

Also on the program was Bobby Gray from the City’s Economic Development Department. He emphasized that the boundaries of the “East Village Growth Cell” represent the study area, and may not be the final boundaries of the TIF.

City Council, City of Peoria, East Bluff, Economic Development, OSF St. Francis, Peoria Mayor, Peoria Public Schools, TIF

The East Village Growth Cell is born

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The City of Peoria is taking steps toward establishing another growth cell and tax increment financing (TIF) district. There’s even a website devoted to it. The website is very informative; it includes a map, a frequently-asked-questions (FAQ) page, and a timeline.

Here’s a brief overview of what’s happening: The City has been using a “growth cell strategy” to expand and develop the north and west fringes of the City. They now want to “apply the City’s Growth Cell Strategy to the heart of the City; taking advantage of existing infrastructure and building upon existing public and private investment.” So, they’ve carved out the following area to redevelop:

As you can see, they’re calling this the “East Village Growth Cell.” Already, there is “increase[d] interest in redevelopment,” they say, as a result of the new Glen Oak School and Neighborhood Impact Zone, but “additional public guidance and intervention are needed to further spur growth within the area,” according to the website. So, they want to get this area designated as a “Redevelopment Project Area” and classified as a “blighted area” or “conservation area” so they can create a new TIF. The growth cell and TIF would be coterminous.

That’s it in a nutshell; there’s more information at www.EastVillagePeoria.com.

Of particular interest in this whole process, though, is OSF’s involvement. They’re putting up the money for the study, the website explains: “As one of the larger investors within the East Village, OSF has agreed to advance the cost for the Consultant that will be reimbursed to OSF out of first proceeds if, and only if, Council approves a redevelopment project.” And the Catholic Diocese (specifically Patricia Gibson, Chancellor/Diocesan Attorney) issued the following press release today:

On behalf of the Catholic Diocese of Peoria, I would like to express my overwhelming support for the proposed East Village Growth Cell. This creative and progressive initiative will advance the quality of life of individuals living in the study area and make essential improvements to our most historic and traditional neighborhoods.

Our most precious resources are the families who live throughout the City of Peoria. It’s particularly important that we engage these families throughout the process and demonstrate the City’s commitment to provide resources to reinvest and revitalize the heart of our community. This study area can be the stepping stones to a new beginning for the neighborhoods located within the East Village Growth Cell.

“The proposed study area will be a tremendous blessing to the Peoria community,” says Patricia Gibson, Chancellor/Diocesan Attorney. “The Catholic Diocese has made major investments within the proposed study area including the ongoing restoration of Spalding Institute and a new Pastoral Center. Additionally, St. Mary’s Cathedral and St. Bernard’s Parish are uniquely located within the proposed boundaries. We believe that this neighborhood will continue to grow and flourish, and we are confident that an investment of this magnitude will open the door to future development.”

OSF Saint Francis Medical Center has lead the way in providing the highest quality of health care for our city. They continue to show their commitment to the community with the expansion of their campus. We trust that the continued involvement of OSF will greatly enhance future development.

And the City of Peoria also issued a press release that quotes several community leaders; here’s part of it:

A new strategy will ensure that these projects are completed in a consistent manner, thereby becoming a catalyst for future investment.

On July 13, 2010, Members of the Peoria City Council will be asked to approve a request for proposals to conduct a study in the East Village Growth Cell. The study will determine if the area is eligible for redevelopment. A residential TIF has the potential to create opportunities for major improvements in the study area. This initiative marks the first time that the City of Peoria has done a study that includes housing.

“This could be a unique project in that it incorporates opportunities for residential re-development in the heart of one of our older neighborhoods. I believe the council will be anxious to see the study move forward and have an opportunity to discuss the findings.  Perhaps it will generate a model we can use in other more mature areas of our city,” says Mayor Jim Ardis.

Development in the proposed East Village Growth Cell will compliment the ventures currently undertaken in the area, including investments by OSF Saint Francis Medical Center and District 150 in the surrounding neighborhood. The study will also provide the opportunity to develop businesses within the Growth Cell.

The East Village Growth Cell presents an opportunity for a major collaboration between Peoria School District 150, OSF Saint Francis Medical Center, and the City of Peoria.

Dr. Grenita Lathan, Superintendent of Peoria Public Schools said, “We look forward to partnering with the City and OSF on this potential growth opportunity for Glen Oak School and the surrounding neighborhoods.”

“OSF Saint Francis Medical Center is pleased to support the East Village redevelopment project. We believe the stabilization of the neighborhood and the increase in home ownership will have a positive impact on the area,” says Sue Wozniak, Chief Operating Officer, OSF Saint Francis Medical Center.

The study area has the potential to provide for future growth, improvements to the surrounding neighborhoods, and redevelopment of affordable housing.

So, let’s see, the Mayor, the D150 Superintendent, the OSF COO . . . . I do believe this is a highly coordinated effort. All these press releases, the website, a surprise public meeting with residents, and the City Council agenda came out on the same day at the same time. Sounds like yet another deal that has been brokered behind closed doors and rolled out to the public with great fanfare, ala the Wonderful Development.

I hate to be cynical, but this just looks like a typical “done deal” with public input solicited after the fact for window dressing. It bothers me that there’s been so much apparent coordination by public officials out of the public’s eye. The public doesn’t have much time to look into this project before the City votes on pursuing it. That’s generally how the Council likes it.

City Council, City of Peoria, Methodist Hospital, OSF St. Francis, Peoria Park District

Big non-profits doth protest too much

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The Journal Star is reporting that some area non-profit businesses are concerned about the possibility of the City Council imposing a 5% utility tax on water:

With the City Council weighing a possible 5 percent utility tax on water, not-for-profit organizations such as hospitals, colleges and local governments like the Peoria Park District are examining how they can absorb a cost that could impact their operations….

Chief financial officers at the city’s cash-strapped hospitals — OSF Saint Francis Medical Care Center, Methodist Medical Center and Proctor Hospital — say the proposed increase could lead to operational changes within their organizations….

St. Francis spends about $600,000 each year on water. A 5 percent utility tax would increase the expense by $30,000, Harbaugh said.

At Methodist, the hospital’s water bill ran about $300,000 last year, and the proposed increase would mean an extra $15,000 to $20,000 a year in expenses, said Cal MacKay, the hospital’s senior vice president and CFO….

Peoria Park District Director Bonnie Noble said her district is estimating a 24 percent increase in water rates for next year, or an additional $60,000 tacked onto a typical annual water bill of $250,000. She said costs for park services could go up if the water utility costs spike.

“We’d have to spread the costs,” Noble said. “You just can’t keep absorbing these kind of things and run the same kind of operation you’ve run before.”

Three entities are looked at in detail here: OSF, Methodist, and the Park District. And we have an estimated annual increase in water bills for each entity: $30,000 for OSF, $15-20,000 for Methodist, and $12,500 for the Park District. Note on the Park District’s quote that the $60,000 figure listed in the article included Illinois American Water’s rate increase, which is outside the city’s control and was not figured into the OSF or Methodist figures. So, to compare apples with apples, I took the city’s proposed 5% fee times the Park District’s annual water bill of $250,000.

Now let’s take a look at some other recent news stories about these organizations (emphasis added):

The new OSF Center for Health at Glen Park will be open to the public Sunday. The 53,000-square-foot facility is set to open its doors after 19 months of construction on the $18 million project, which includes three buildings on the campus featuring 24 primary care physicians.

–June 12, 2009

On an average day, 200 tradesmen work on the hospital’s [OSF’s] $280 million Milestone Project, designed to modernize and expand the center and Children’s Hospital….

–January 17, 2009

What’s the monthly debt service on $298 million? I think it’s safe to say that one monthly payment alone dwarfs the $30,000 annual increase in costs that could result from the city’s imposition of a water utility fee. $30,000 is a rounding error for OSF.

Methodist Medical Center will delay the final two stages of its $400 million hospital renovation project until tight conditions in the credit market begin to loosen, CEO Michael Bryant said Thursday…. Methodist will continue with the first two phases of its massive renovation plan, which carry a combined price tag of nearly $30 million and include building a parking deck and constructing a new entrance to the hospital off Hamilton Boulevard.

–November 7, 2008

The same goes for Methodist. Even a more modest principal amount of $30 million will result in monthly debt service payments that go way beyond the predicted annual increase of $15,000 to $20,000. To put this increase in perspective, a single birth can cost a patient that much money.

But here’s my favorite:

In anticipation of shrinking revenues, the Peoria Park District will cut its budget for the rest of the year by $390,000, but the public will not be overly affected. “On a $40 million budget, this is less than 1 percent,” said Jan Budzynski, the park districts’s superintendent of finance and administrative services.

March 3, 2009

So, let me get this straight: Cutting $390,000 out of the park district budget is no big deal — it’s less than one percent of the budget and “the public will not be overly affected” — but an increase of $12,500 in water fees is going to be difficult to absorb — so much so that they’ll have to raise the cost of park services? [Insert “Dueling Banjos” music here.] It probably goes without saying, but the Park District can’t have it both ways.

It sounds to me like all these protests are pretty weak. If an attempt is being made to garner opposition to the water utility fee, this isn’t the way to do it. These large organizations with their conspicuous building projects aren’t going to get a lot of sympathy from the public. In fact, hearing how little this fee would impact them monetarily, it actually makes me more favorable toward it.

City Council, City of Peoria, OSF St. Francis

Riggenbach takes neighbors to task for opposing OSF

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RiggenbachAt the last City Council meeting, the council approved a new institutional (N-1 zoning) plan for OSF St. Francis Medical Center. Part of the plan called for the future construction of an “energy center,” which is a euphemistic way of saying “industrial power plant.” Power plants are ugly, loud, smelly, and require no small amount of semi-truck traffic to supply. OSF took a look at this power plant and decided the best place for its future construction would be right next to a single-family neighborhood, on the edge of the N-1 zone.

Neighbors were alarmed. They contacted their councilman, rookie Tim Riggenbach, and signed a petition objecting to OSF’s plans to build a power plant next door to their homes. The council, however, approved OSF’s plans anyway and simply received and filed the residents’ petition without comment.

In the Journal Star’s Word on the Street column today, we get a little insight into Riggenbach’s thinking on the matter. It’s not pretty.

Third District City Councilman Timothy Riggenbach hopes opposition to OSF Saint Francis Medical Center’s wishes to someday build an “energy center” in the East Bluff won’t scare off other developers from being transparent in their future plans.

“I would hate to think developers will take the wrong lesson from this,” he said. “We want to encourage as much openness and transparency as we can.[…] If I lived there, I’d rather want to know about it now than have it sprung on me down the road,” Riggenbach said. “We can prepare for (the energy center) and make sure we have the right noise ordinances in place.”

Oh, I see, the neighbors shouldn’t have complained because now it might scare other developers into being less forthcoming in their future plans, is that it? That’s got to make the neighbors feel good. Not only did Riggenbach not support them on the council floor, now he’s publicly taking them to task for giving OSF such a hard time. One wonders what value there is in “openness and transparency” from developers if it doesn’t allow neighbors the opportunity to object to certain plans or negotiate changes.

It sounds like Riggenbach is saying, “Look, neighbors, developers are going to punch you in the stomach and you’re powerless to stop them. Now, do you want to know in advance that they’re going to punch you so you can brace yourself for it, or do you want them to punch you when you’re not looking? Those are your options.” Not an option, apparently, is negotiating a way that the neighbors won’t get punched at all.

If I were Riggenbach, I wouldn’t worry too much about what “lesson” developers take from this episode. I think the lesson was quite clear: The council is going to approve your project no matter how egregious it may be to the surrounding neighborhood. The council has been sending that message to developers for years, so why would they start fretting about it now? Just because of a little petition drive? Pshaw.