INTERDEPARTMENT CORRESPONDENCE

CITY OF GALESBURG

Community Development Department

DATE: Wednesday, February 13, 2002

TO: Gary Goddard, City Manager

FROM: Roy A. Parkin, Director of Community Development

SUBJECT: TIF II Development

Attached is a copy of a letter from Larry Bianchi of Janko Financial Group. Mr. Bianchi is part of the Galesburg Development Group who is developing the property in the TIF II area (e.g. Holiday Inn, Taco Bell). In his letter Mr. Bianchi, on behalf of the Galesburg Development Group, is requesting a three year extension of the two current lease agreement with options to purchase that Galesburg Development Group has with the City. In addition, there is a request to extend for an additional three years the current TIF property tax increment reimbursement incentive.

The City currently owns thirteen lots in the TIF II area. The attached map shows the location of these lots. Galesburg Development Group has two leases with options to purchase these lots. Under the current leases Galesburg Development Group leases the lots for $1 per year. They have an option to purchase each lot. Galesburg Development Group is requesting the leases, be extended an additional three years. They have already purchased adjacent properties (see attached map) and would like to continue to market the area for redevelopment.

In regards to the incentive, the City currently has in its economic development incentive policy a guaranteed 50% property tax increment reimbursement incentive for a specific area in the TIF II District. The attached map indicates the area in which this incentive applies. This incentive expires on May 2, 2002. This allows Galesburg Development Group to market the guaranteed incentive to potential developers. Under this incentive a developer receives no TIF funding up front. Instead, once the development is completed and property tax increment is being generated, the developer receives 50% of the property tax increment generated from the development. This property tax increment payment reimburses the developer for eligible TIF expenses from the developer’s project.

If the City Council desires to extend the lease agreement with the Galesburg Development Group and the TIF II property tax reimbursement incentive, I will have the proper documents prepared and brought back to the City Council for their formal approval.

RAP:bh

Attachment

cc: File Copy