City looking at $2.5 million bond issuance for improvements to downtown area
‘It makes more sense to do the improvements now while the costs are where they're at’
ROCHELLE — At its meeting on Sept. 11, the Rochelle City Council discussed the option of issuing alternate revenue bonds not to exceed $2.5 million for the purpose of paying the cost of improvements to the city's downtown tax-increment financing (TIF) district and resolved to move forward and look into the issue further.
City staff has identified numerous infrastructure projects needed in the area such as site redevelopment, installation of parking lots and sidewalks, moving electric infrastructure underground, street reconstruction and other improvements. Those projects are usually funded by saving funds year over year.
Staff has recommended taking advantage of "the potential of a low interest rate environment" and issuing bonds. TIF districts grow funds through development in the area that generates increment. The debt service payments would be paid out of downtown TIF through the life of the TIF district and it would not require a property tax rate increase.
City Manager Jeff Fiegenschuh said Sept. 20 that a parameters ordinance to give staff authority to explore the issuance of debt will likely be voted on at the city council’s first meeting in October. A final ordinance vote to go out to sell the bonds would take place at the second meeting in November and the bond issuance would take place in December.
Fiegenschuh went into more details on the potential uses of the funds
“We talked a lot about the reconstruction of 2nd Avenue,” Fiegenschuh said. “There are some other properties we'd like to look at for some redevelopment. Certainly replacing some water and sewer mains and boring electric infrastructure out behind Lincoln Highway near the municipal lot where events are held. We're also looking at other sidewalk and street improvements. A lot of it is going to be geared towards infrastructure improvements."
The city manager said it’s important that the city not only support the downtown area economically, but also through ensuring sound infrastructure for the businesses that reside in it.
In recent years, the city has worked on separating shared service lines to downtown businesses, which is not up to code today. The downtown can be supplied with power during an outage by the Rochelle Municipal Utilities power plant, Fiegenschuh said.
“I think that adds value, too,” Fiegenschuh said. “It's hard to market your property if you can't guarantee that there's going to be a reliable source of water, sewer and power. I think it adds to the marketability of downtown and we do it in a way that is cost effective. The council lowered our commercial electric rates a few years ago and we don't have any plans to raise them. Reinvestment in infrastructure is important. It's roads and sidewalks. I'm big into walkability and I know a lot of people are. Having the ability to connect the downtown to the southern and northern corridors and allowing people to come in and congregate and walk and not have to drive adds value to the properties and experience of the downtown."
All three of the city’s TIF districts have seen increases in their value recently, with the highest increase being the downtown TIF district. That’s been due to private investment including improvements at Kenny Farms Distilling, the newly-renovated Seldal Properties building, Acres Bistro and ScaleHouse Lounge & Slots.
“The downtown has seen a lot of investment and that new investment is generating additional increment and that increment can go towards funding projects to continue to grow the tax base in the downtown area,” Fiegenschuh said. “It takes private investment to grow EAV, so we need more private investment. And we've been very blessed to have some very good businesses and business owners invest in our downtown. Our job is not to bring in business, it's to create an environment that’s conducive to economic growth. And I think that we're doing that."
The city’s desire to make the bond issuance for downtown infrastructure improvements is an effort to hedge against future higher project costs.
"We have a lot of improvements to infrastructure that we'd like to make in the downtown area,” Fiegenschuh said. “We have a guaranteed source of revenue to come in and pay for it. Sure, we could save up for it over the next three years. But if the interest rates come in at a competitive level, it makes more sense to do the improvements now while the costs are where they're at and not going up."