By JILLIAN STAMBAUGH

Eagle Staff Writer

Faced with becoming a dead zone for traffic and expansion due to the new Ill. Route 336 corridor just south of city limits diverting drivers away, Colchester’s city council looked pleasantly surprised to hear that Dollar General is interested in coming to town.

Representing the developer for Dollar General, Dan Elkin indicated that the company was interested in the community, seeing it as their ideal niche setting.

“We have just been going to little communities and haven’t even expanded into urban areas – they have it down to a science,” Elkin told the council.

The location selected by Dollar General is visible from Route 336 but between the freeway and city limits, requiring the city to purchase the land and annex the property to be within limits.

“The property owners are interested in selling,” said Alderman Catherine Louderman, who has been the city contact for the proposal. “There’s a pretty good acreage there.”

Elkin informed the council that Dollar General is only interested in two acres, saying, “I know that’s also prime real estate as far as future development for the town.

“However, there are a couple of hurdles we need to overcome before we can make this happen,” he informed the council. “Dollar General does want to be here, but we need to get transmission lines as far as water and sewer to this particular location and we will require a TIF (Tax Increment Financing) to help support our development costs.”

Mayor Danny Bice said water would not be an issue, as all they require, according to Alderman Louderman, is what a home needs. A forced main would have to be created for the sewer line.

As for considering TIF, Eric White, Principal at DMI solutions, Cahokia, explained what it entails.

“I put together a basic project understanding for you,” White said. “From start to finish, it is an eight-month process if everything goes well.”

As Colchester has not been involved with TIF before, White offered an explanation. For example, if a property has an assessed base value of $100, taxes are paid on that property, perhaps $8. The tax is then collected and distributed to everyone involved. When a project is built on the property, the value increases to $200, causing the taxes to increase also. Taxes are then paid on the property with the first $8 of taxes still going to the original distribution while the second $8 is captured by the TIF area to be used for infrastructure and various costs associated with the project in that area.

The TIF area will not raise property taxes, the school district will not be bothered, farmers in the vicinity will not be affected, nor will it cost the city anything, White expressed in answer to inquiries.

“The argument sometimes is that ‘well, we’re missing out on taxes,’” said White. “In essence, what you’re really doing is arguing about dollars that don’t exist. You can’t offset the project costs of putting a TIF in place if the project doesn’t exist.”

With a Dollar General store producing $1.2 - $1.3 million a year, the city could receive $12,000 - $13,000 annually in additional revenue from sales tax alone.

Alderman Louderman spoke in favor of the store, as it will help the city make up for lost funds.

“The city needs the revenue from the sales tax of whatever marketable item would go anyplace,” she said. “Because of the general economy, other businesses in town are closing down so we need to encourage whatever businesses we can to come to Colchester to regenerate those revenues we need to be able to function as a city.”

A TIF district can be in place for 23 years, but could be retired when the city felt it served its purpose or expanded if necessary.

Elkin said Dollar General requires the TIF because their costs to build have risen drastically, along with the larger down payment necessary to begin.

“In the past year, a high percentage of the new stores have been brought about using TIF,” he said. “It’s hard to rationalize the cost and the uncertainty; the risk being created right now.”

Having a 10-year lease with Dollar General, Elkin assured the council the store would not bow out in early years.

“Dollar General is frequently an anchor store,” he said. “As a traffic generator, it helps out tremendously and could open up the way for other businesses.”

White said he would be willing to produce possible scenarios for the city so they can see what could happen in terms of revenue. Louderman told her fellow Aldermen that bringing the two representatives was for informational purposes – no decisions had to be made directly, but she understood the need for thinking the matter over.

“I brought them so everyone can hear the information and have time to digest it, and see, if we’re interested in doing it, what it would take to move forward then make a decision yay or nay” she said. “At this point, we’re just wanting to get information.”

In other business:

• The council approved of entering into a contract for the amount of $42,000 with Central Tank Coating to paint the city park water tower and made an addition to the tower costing $4,600.

• The council approved Cox Construction’s proposal of $5,600 and an upgrade for an additional $600 to replace the light pole at the south ball field in Friendway Park. The city is still waiting to hear from the insurance company, but decided to move forward.

• The council approved of reimbursing $458.14 to the Summer Ball fund for the purchase of new windows in the Vic Williams Memorial Shelter House.

• The variance for Ira Liggett to construct a garage on his property at 714 W. South St. was approved.

• The variance for Marvin Phelps of Marvin’s Hair Hut for a portable shed to be installed on his property at 105 E. Depot St. was approved.

• The council gave the Building and Grounds Committee power to act on the installation of the ceiling at the shelter house, which will be provided by the Summer Ball Committee and reimbursed by the city.

• The council gave the Finance Committee power to act on the 08-09 audit after questions are answered for the council.

• Officers and committee members of the Summer Ball program for the 2010 season were approved by the council.

• The council approved hiring Justin Weber as a full time employee.

• The council approved of advertising for a part-time general labor city employee.

• Approval was granted to require and provide general labor employees to have the series of Hepatitis B shots and a tetanus shot through the McDonough County Health Department.

• First reading of the amended burning ordinance was held.

• City Clerk Donna Wetzel informed the council about Labor Day profits, saying they had sold more advances sale tickets and believes carnival sales were up $200-$300 dollars from last year.

• Police Chief David Bland said the police department received a grant for a maximum of $7,500 in federal money that needs to be spent by Sept. 30. He plans to use the money to purchase a camera for the car and portable radios officers totaling $6,832 with the city’s share totaling $1,708.