Wheaton officials agreed the city should wait to pay for most of a developer’s public improvements until the end of construction—when there is no doubt people will live in the proposed luxury apartment complex in downtown Wheaton.
The city will assist Morningside Equities, LLC, the developer planning to build , a 300-unit complex at 218 Wesley Street with Tax Increment Financing (TIF) District 2 funds for public improvements, including public plazas, street lighting, curb improvements and public benches.
City Manager Don Rose sought council direction for staff Monday night to determine how the city would provide the TIF funds for the project, which could start next month.
Rose proposed the city pay an estimated $500,000 immediately for the most expensive public improvement: to bury the overhead utility lines along the west and north sides of the property.
The city would pay for the work, “almost on day one” of the project, which could be in June, Rose said. To avoid interest accrual, the city could use existing TIF District 2 revenues, which showed a balance of more than $700,000 April 30 and are projected to be more than $1.6 million April 30, 2013, he added.
Using Morningside's proposed "pay-as-you-go" system, the city would city would reimburse the developer’s costs for public improvements through the TIF as revenue from the project is available.
The problem with the “pay-as-you-go” approach would be the significant interest costs, Rose said. “Based on where we are it looks like that could be about $300,000.”
He suggested two options: the city pay for improvements out of general reserve funds, or TIF funds, as costs are incurred, or wait to pay until the developer secures an occupancy permit at the end of the project.
Council members supported paying to bury the power lines at the time of the improvement and paying the developer after an occupancy permit is secured.
Councilwoman Jeanne Ives said most of the public improvements would take place at the end of the project, when there is no question the property will add Equalized Assessed Value (EAV) to the city. She added that the proposed improvements are appropriate for TIF assistance from the city, especially after the city’s recent commitment to a “major redesign” of the downtown.
Based on Council direction, city staff will prepare an official agreement with Morningside for Council to approve at a future meeting.