The purchase of 1800 Sherman Avenue by Northwestern University and its subsequent removal from the tax rolls has caused irreparable damage for untold years to come to both the school districts and the City. Citizens have suffered a permanent loss of  $1 million dollars a year in property taxes. Residents will have to makeup the shortfall in the form of property tax increases.  While, as noted in earlier posts, free fire service continues to be provided to this building in our downtown.  We are paying for that too.

The purchase of this valuable, commercial piece of property and its removal from the tax rolls ran counter to an agreement between the City and university in 1960 where, under zoning changes, the university pledged it would not buy and develop property west of Sheridan Road.

In addition, the action also was a violation of the agreement between the City and university in early 1986, which established the tax increment-financing district to develop the Research Park. The primary reasons for the development were to enhance the tax base and to create jobs (lest we forget the thousands of jobs that the Research Park was to create). The agreement provided that the park would be developed as part of a TIF district (known as Down Town II) that the City would create to energize the dilapidated area that during that time, produced little tax revenue for the City and schools.

The 1800 Sherman building was specifically included in the TIF district because the City needed the tax revenue from the property to help pay for the bonds that were floated to finance property acquisition costs and infrastructure improvements. The breach of that agreement by Northwestern undercuts the rationale, which was generation of more taxes for the City and schools.
 
Not only was NU's resolve to remove the property from the tax rolls in violation of their agreement with the City, but it was in violation of public policy underlying the creation of TIF districts: the conversion of fallow land, and the low tax-producing uses, to new construction and higher tax-generating uses.

The school districts which receive the largest portion of tax revenue, and which supported the creation of a TIF district for the Research Park in 1985 - on the representations of the City and NU - that they would benefit from the higher real estate taxes after the TIF expires in 2008, are hurt the most, though the City certainly suffers, and most especially its taxpayers.  After the TIF expires, the schools had reasonable expectation that they would receive about $600,000 annually at current levels into the future.  Because the purchase by NU occurred in 2004, the revenue lost to the City was money that was flowing to DT II TIF and the schools weren't immediately impacted.  However, the City felt the loss of revenue immediately, as the City was planning to use TIF tax dollars to pay down debt incurred for construction of the Maple Ave. garage.

 It is important to note that Northwestern offered a one time “Gift” of $300,000 to the City, and $175,000 to each school district to recognize the loss.  Significantly, this “Gift” was not sufficient to fund the garage and meet the terms of the TIF. Do the math. 

The loss of  $1 million dollars annually to the DT II TIF impacted the ability to pay down the loans on the land acquisition and costs to build the Maple parking garage.  Other development in the TIF such as the mini anchor, the Optima building, the hotel and theatre have helped to make the DT II TIF successful.  There is no reason for it not to be, considering the purpose of the TIF, the 1985/86 EAV, and the development that has occurred within it since its creation.  However, as noted in other posts, any surplus that was expected is now being shifted to the (now expanded) contiguous WN TIF to help cover costs of the Sherman Avenue garage.