Local Officials Puzzled By State's Pick For Tax Incentive Zone | WGLT

Local Officials Puzzled By State's Pick For Tax Incentive Zone

May 29, 2018

Local officials are scratching their heads about why the state picked a chunk of Illinois State University’s campus as McLean County’s sole tract for a new tax incentive program designed to help low-income areas.

The new Opportunity Zones were created through the federal tax overhaul that passed in December. States like Illinois were able to nominate 25 percent of their low-income census tracts as Opportunity Zones. The U.S. Treasury Department recently approved Illinois’ list of zones, including the one in McLean County.

It’s unclear why the ISU zone was chosen. The Opportunity Zone includes most of the campus, as well as some off-campus apartments and other businesses.

“We’re not complaining about it, because it’s an incentive tool,” said Vasudha Gadhiraju, executive director of the McLean County Regional Planning Commission (MCRPC). “But our community would have been better served if that zone was someplace where there’s a lot of developable or re-developable land that’s not under institutional ownership.”

The ISU tract was included in a long list of eligible tracts that Gadhiraju’s MCRPC sent to the governor’s office, in partnership with the Bloomington-Normal Economic Development Council (EDC) and the City of Bloomington and Town of Normal.

But it wasn’t one of the priority tracts they identified, Gadhiraju said.

“The one that was designated as an Opportunity Zone by the governor’s office, you should ask them how they picked that,” Gadhiraju told GLT. “Because there is not much developable land that’s not owned by the university in that tract.”

Gov. Bruce Rauner’s administration used a three-phase process to pick which locations to submit to the federal government. That included need-based indexing, such as poverty and unemployment rates; spreading the zones evenly around the state; and local consideration, such as crime rates and existing infrastructure.

“The three-phase process was applied to areas across the state, including the tract you’re referencing. Local officials may be able to speak more specifically to the specified tract,” said Jacquelyn Reineke, a spokesperson for the Illinois Department of Commerce and Economic Opportunity.

But local officials say they don’t really know why the tract was chosen. Gadhiraju said their top picks were on Bloomington’s west side and along Veterans Parkway, among others. Gadhiraju said she saw potential for affordable housing and other projects.

“We have no idea why they chose essentially ISU’s campus,” said Zach Dietmeier, a spokesperson for the EDC. “There’s not a whole lot of developable land there.” 

Dietmeier praised Bloomington, Normal, and EDC leaders for their quick collaboration on the list of eligible tracts, even if the priority tracts were not chosen.

Eric Jome, a spokesperson for ISU, said they too don’t have any information yet about why the campus was chosen. They’re looking to find out more, he said.

Other college towns also were picked for Opportunity Zones, including DeKalb (Northern Illinois University) and Carbondale (Southern Illinois University).

The Opportunity Zones give private investors tax benefits if they make long-term investments in certain areas—in this case, allowing them to re-invest unrealized capital gains. The state submitted 327 Opportunity Zones that were approved.

“This is a really exciting opportunity for communities throughout Illinois,” Rauner said in a statement. “These zones include some of the most underserved areas of the state that have the greatest potential for improvement. They represent a broad cross-section of Illinois that includes rural, urban and suburban in-need communities that are ripe for investment and job creation.”

U.S. Rep. Rodney Davis, R-Taylorville, who represents parts of Bloomington-Normal, said the Opportunity Zones will “spur economic investment in areas that need it the most.”

“During the recession, many of our rural communities were hit the hardest and have been the slowest to recover. The tax-free, private investments that will be a result of these Opportunity Zones will help create jobs and grow these communities,” Davis said in a statement. “We've only just started to see the benefits from tax reform and because of provisions like this, we will continue to see tax reform help Americans at all income levels.”

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