City of O'Fallon Incentive Policy

Policies For Providing Economic Development Funding Assistance

PURPOSE: The purpose of this policy is to assist in attracting and retaining high quality development that is compatible with the long-range goals expressed in the Strategic Plan and compatible with land uses as outlined in the Comprehensive Land Use Plan.

GENERAL POLICY: The City of O'Fallon may, at the City's discretion, provide financial or in-kind assistance to new or existing commercial, industrial, or institutional development through the use of incremental and other revenues accruing to the City (and other taxing districts where a project is to be located within the City's existing TIF district).  The city will assist developers in seeking State and Federal incentive financing if requested.

DETAILED POLICY:

1.  Economic incentives considered by the city must provide a demonstrable return to the city for the future investment of incremental tax revenue and will only be considered if the project would not be possible without this assistance.  Incentives of other types can be considered when the direct result of the incentive is the encouragement of development, which meets the City's goals and objectives.

2.  Requests for economic development assistance must be in the form of a completed Application.  That application must be accompanied by detailed financial information that demonstrates the developers projected revenue that the project is expected to generate.  The basis for the financial estimates should be included.  This information will be regarded as proprietary and will remain confidential.

3.  For projects that are requesting sales or property tax rebate incentives, only those City revenues, which are directly accrued on an annual basis by the proposed project, will be considered for use to assist the development or redevelopment activities and costs.  These incremental revenues are those, which annually result from the proposed project in excess of current City revenues being generated from the project site or area.

4.  Eligible project elements to be financed shall be limited to the actual costs of improvements or activities:

a. Project costs which can be characterized as public improvements or of direct or indirect benefit to the public to include items such as: upgrade or installation of roads, water and sewer lines including storm water detention facilities, demolition of existing buildings, removal of existing infrastructure which is antiquated, removal or mitigation of hazardous materials or substances, removal or relocation of physical impediments to developing the land (i.e., underlying rock, canalization or relocation of storm water courses, major site grading to correct large topographic variations, etc.), costs associated with planning and engineering of the public improvements as defined above, including the City's planning and legal costs associated with implementation of the economic development assistance program for the project, and relocation of existing residents or businesses.

b. Land acquisition costs include those which are over and above current market values for property suitable for commercial or industrial development due to the factors such as added cost for the value of improvements which have no value to the planned project and the costs associated with the acquisition of property using the City's power of eminent domain.

5.  The applicant will demonstrate that but for financial assistance requested from the City, the project would not otherwise be carried out.  The developer would provide an affidavit to such effect.

6.  Normally, not more than 25% of the total project cost will be supported by incentive revenues.  Total project cost is the cost of development of the project including all land, site, and public infrastructure, and building and site amenity costs necessary to constitute an operating commercial or industrial project.  Financial assistance will not normally exceed 50% of the incremental City revenue to be generated by retail commercial uses and will be limited to a 10 year period.  Financial assistance will not include interest on the developer's invested cost that the incentive is being applied to.

7.  For projects that generate sales tax revenues, a portion of the revenues generated and accruing the City will be retained by the City.  The percentage to be retained by the City will be determined through negotiations between the applicant entity and the City.

8.  For multi-phase projects or those having multiple buildings, assistance will be provided based on the overall development program and channeled through a single development agreement with the prime developer.  No separate financial incentives or assistance to owners or developers of parcels that are sub-components of the primary project will be provided.

9.  All project assistance from the City will be provided based on a negotiated development project agreement between the City and the developer and is adopted by ordinance.  That agreement will contain a cost recovery process to follow in the event that the assisted project fails prior to the completion of the period covered by the incentive.

10.  All projects for which City financial assistance is requested (except those within the TIF District) will be required to conform to the provisions of the Illinois Business District Development and Redevelopment Act (65 ILCS 5/11-74, 3-1) and shall meet all of the stipulations and requirements therein.  Projects proposed within the TIF Districts shall be subject to the provisions of the Illinois Tax Increment Allocation Redevelopment Act (TIF Act, 65 ILCS 5/11-74, 4-1).

11.  Projects that involve the relocation of an existing activity from one location to another within the boundaries of the City or involve the redevelopment of an existing activity shall have the incremental revenue generation amount based upon the amount in excess of the revenue previously accruing to the City at the existing location.

12.  Financial assistance provided by the City to reimburse eligible project costs shall be repaid so the developer based on a note agreement adopted by ordinance that is in concert with the provisions of the Business District Development and Redevelopment Plan and companion Development Agreement ordinances adopted for the specific project.  This note shall not bear revenues generated by the project.  The provisions of this policy may be modified or waived by the City Council for projects within the boundaries of a TIF district.

13.  No assistance will be provided to any project for expenditures incurred prior to the adoption of the ordinances required to implement the project.

14.  The City will require the developer to pay an application fee at the time of application to be applied toward the City's legal and planning costs associated with the implementation of the economic development assistance program for the project.  This application fee shall be an amount of $1500.  One thousand dollars constitutes a deposit, $500 is non-refundable.  An accurate estimate of the total amount of the City's legal and planning costs associated with implementation of the project shall be given to the applicant/ developer in writing not less than ten (10) business days prior to the scheduled passage of the ordinances(s) implementing the project.  City legal and planning expenses in excess of $1000 will be billed to the applicant and are payable prior to council consideration.  These expenses are an eligible project cost reimbursable to the applicant/developer via the incremental revenue payments made by the City and payable on passage.  In the event that the City Council does not adopt the ordinances as provided for above, this payment less any incurred expenses, minus the application fee ($500), will be returned to the applicant/developer.

15.  In addition to the policies set forth above, the following miscellaneous provisions should be noted by any applicant/ developer seeking economic development financial assistance from the City of O'Fallo9n in the form of incremental revenue reimbursement:

a. The adoption of these policies by the City Council in the form of a resolution should not be construed to mean that the provision of financial incentives using incremental revenues to be generated by a proposed project is inherently approved for any applicant and/or project that may be able to comply with the policies as set forth herein.  Each project will be approached as an entity to be independently evaluated.

b. The City reserves the right to amend, modify, or withdraw these policies; revise any requirement of these policies; require additional statements, sworn affidavits as to the but for provisions of these policies or other information from any applicant/ developer, to negotiate or hold discussions with any applicant/developer/ and or project which does not completely conform to the policies as set forth above, to waive any nonconformity with these policies, to eliminate these policies in whole or in part, if the City deems it is in its best interest to do so, and to waive any timetables established by ordinance, resolution or motion.

c. Submission of an application for economic development assistance that complies with the spirit and intent of these policies does not commit the City to approval of the development/ redevelopment project associated with said application.

16.  The City may exercise the foregoing rights at any time without notice and without liability to any applicant, developer and/ or project or any other party for its expenses incurred in the preparation of an application for economic development assistance.  The preparation of any such application and related costs associated with responding to the City in its review of such application shall be the sole responsibility of the applicant/ developer.