City plans TIF to help revitalize River Oaks
Plan would develop unused parking areas around shopping mall
Calumet City civic leaders envision better uses for vast asphalt parking lots that surround the River Oaks Center shopping mall along Torrence Avenue.
The city wants to attract restaurants and other stand-alone stores to the spaces, a move that will generate new tax revenue from commercial businesses and ease the property tax burden on homeowners.
“The plan suggests further development of additional outlots around the mall, including unused parking areas around the mall on all sides,” according to a redevelopment plan presented to the city council last week.
“Properties with frontage along Torrence or River Oaks Drive are best suited for retail/ restaurant or office uses.”
The redevelopment plan is a key step toward the city creating a new tax-increment financing, or TIF, district. The new district would consist of 39 tax parcels in an area generally between 159th Street/River Oaks Drive, Ring Road, Paxton Avenue and River Road.
“The area includes River Oaks Center and River Oaks West,” another retail center west of Torrence Avenue, said Pete Saunders, the city’s economic development coordinator.
Stores and restaurants in the proposed TIF district account for 45 percent of the retail space in the city of 37,042 residents, according to the redevelopment plan. That’s a hefty portion of the city’s tax base.
River Oaks Center is among the largest retail destinations in the south suburbs. The shopping center opened as an outdoor mall in 1966 and was developed for $35 million by investors, according to the redevelopment plan.
A key partner was the late Philip M. Klutznick, who also was instrumental in developing the town of Park Forest and the Oak Brook and Old Orchard shopping centers.
“He served in the administrations of seven American presidents and was a long-time leader in the Jewish community,” the Park Forest Historical Society said of Klutznick, who was the first inductee into its Hall of Fame in 1989.
The mall kept pace as shopping tastes evolved over the decades.
“A major renovation in the 1990s took the mall from an open-air mall to a completely enclosed mall,” according to Calumet City's redevelopment plan.
The shopping center gradually lost some of its luster. Macy's and J.C. Penney remain as two of four anchors, but Sears and Carson Pirie Scott closed in 2013. Earlier this summer, the River Oaks movie theater building that closed in 2006 was demolished.
The 1.3 million squarefoot mall was acquired in 2017 by Long Island, N.Y.based Namdar Realty Group/Mason Asset Management for $26.3 million, Crain's reported. The shopping center is home to more than 125 retailers, including Cosmetics Glamour Bar and Foot Locker, according to the mall's website.
A Namdar/Mason representative did not immediately return a call Thursday requesting comment about future plans for the property.
The city's redevelopment plan, however, states goals for River Oaks Center and River Oaks West are to maintain existing anchors, attract new development around the properties and improving commercial building exteriors to make them more attractive.
TIFs are an important tool used to rejuvenate blighted areas. Illinois and 48 other states use TIFs to encourage private investment. Illinois law has allowed TIFs since 1977, and there are more than 1,300 TIF districts in more than 250 communities throughout the state.
The 447 TIF districts in Cook County generated more than $1 billion in revenue in 2017, an 18 percent increase from the previous year, Cook County Clerk David Orr said in an annual report in July.
“TIFs can be an effective economic tool if used responsibly,” Orr said in the report. “But TIF generated revenue flies under the radar of many taxpayers who don't realize they're paying additional taxes without the same oversight as traditional property taxes.”
Calumet City has previously created TIF districts in other parts of the community and the entire town is in an enterprise zone that offers such incentives as exemptions on sales taxes and waiver of building permit fees.
When a municipality creates a TIF, it sets the value of property within the area at a certain point. A municipality can borrow money to pay for infrastructure improvements and work with developers to encourage investment in private projects.
As the value of property increases over time, revenues that exceed the fixed value when a TIF was created go into a separate fund and may be used to repay bonds, fund public improvements or pay for other eligible economic development purposes.
“These ‘new' revenues arise if new development takes place in the TIF district, or if the value of existing properties rises, resulting in higher tax bills,” Orr's office says on a “TIFs 101” page on its website.
“These funds can be spent on public works projects or given as subsidies to encourage private development. But TIFs can also make it easier for a city to acquire private property and demolish buildings to make way for new construction.”
Property owners pay the full amount of taxes as values increase. TIFs are set to expire after 23 years. Calumet City intends to set the equalized assessed value, or EAV, of property within the proposed new TIF district at $51.8 million, based on 2016 assessments, according to its redevelopment plan.
“Upon completion of the anticipated private development … over a 23-year period, it is estimated that the EAV of the property … would increase to approximately $68.5 million to $75 million,” the plan states.
Calumet City estimates total costs of $28.2 million worth of improvements within the proposed TIF project area. Those costs include $10 million for land acquisition and relocation, $7 million for rehabilitation of existing structures, $5.5 million worth of utility improvements and $3.5 million in demolition and site preparation costs, according to the plan.
“Funds necessary to pay for public improvement and other project costs eligible … are to be derived principally from incremental property tax revenues, proceeds from municipal obligations to be retired primarily with such revenues, and interest earned on resources available but not immediately needed for the plan,” according to the redevelopment plan.
The city council held a public hearing on the proposed TIF district on Sept. 13 and is set to adopt ordinances creating the new district on Sept. 27.