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A once-moribund retail area on the city’s southside has found new life as a thriving center for shopping and dining, thanks to a method of public funding that provides the capital for redevelopment. The tremendous success of the retail district on the southside, which encompasses the site of a mall whose demise in 2004 left a large gap, is now a source of revenue that will benefit the entire community.
Once the site of a dying mall and a former landfill, the Ireland Road corridor along U.S. 31 on the south end of South Bend is now a thriving commercial center where you can buy a car, shop for clothes and groceries, or pick up materials for your latest home-improvement project.
And while you’re out there, you can grab a bite to eat at a wide variety of restaurants, ranging from fast food to upscale cafés.
A major success
In its heyday, Scottsdale Mall on the southern edge of South Bend was a thriving retail center with several major anchor stores and a variety of specialty shops. But by the time it closed, almost exactly 30 years after it opened, it had become a mere shadow of its former self, a casualty of vigorous retail development efforts in other areas.
And that, some people assumed, was that. End of story.
Retail on the southside of the city would never again be the commercial attraction it had once been.
But people who actually lived there took a different view.
“There was a clamoring from southsiders for retail development,” says Don Inks, director of economic development for the City. “You can’t force retail somewhere. It’s driven by market demand, and there was demand for retail there. The key was to play to the strengths in that area and eliminate some of the barriers to development.”
The revitalized retail developments in the entire southside area, which encompasses Erskine Commons, Erskine Village and Erskine Plaza, is one of the City of South Bend’s latest and biggest success stories, the result of a method of public funding known as Tax Increment Financing, or TIF. TIF generates revenues to allow redevelopment and development plans to move forward by reducing existing impediments, which might include:
“In addition to reconfiguring roadways to improve traffic flow, we wanted pedestrian connectivity such as sidewalks and bike lanes so that you could walk or bike from your home to shop,” says Bill Schalliol, economic development planner for the City. “It’s a different corridor out there now, and TIF has been the funding mechanism to make that work.”
Development along the Ireland Road corridor, which includes the site of the former Scottsdale Mall that closed in 2004, has proven so successful that City officials were able to pay off the 20-year bonds for one of the TIF districts about 15 years ahead of schedule. As a result, beginning in 2012, property taxes that have been generated by the new private investment in this area will be available to support the South Bend Community School Corp., the St. Joseph County Public Library, Transpo and South Bend Regional Airport, as well as other units of local government, including the City of South Bend for such purposes as public safety, parks and code enforcement.
How does TIF work?
When a TIF area is established, the assessed value of properties within the area is calculated before any work begins in order to determine the base assessed value. New private development will increase those values.
Taxes generated by the “increased assessed value,” known as the TIF increment, are used to pay for public improvements in the area. Taxes generated from the “base assessed value,” the initial property values at the time the TIF agreement is established, continue to go to all local taxing units. When a project is successful, as with the Erskine Commons TIF, the entire community benefits. The new public and private investment increases the district’s assessed value, expanding the amount of property taxes that fund units of local government.
Don Inks compares the City’s use of TIF funding to the way families handle expenses incurred for a college education.
“You’re not going to find that kind of money in your household operating budget,” he says. “You might go to the bank and borrow money. It’s a long-term loan that will ultimately pay for itself with the increased earning power that typically results from obtaining a college degree.”
Similarly, the City has an operating budget and has to meet the day-to-day operations of maintaining City services. A major private redevelopment project requires improvements to public infrastructure in order to move ahead. In the case of Erskine Commons, an existing landfill had to be cleaned up, services had to be re-routed and roads needed to be improved. Such efforts can be very costly.
Even so, according to Ann Kolata, senior redevelopment specialist, there are many reasons why, increasingly, city planners look to reuse existing sites before considering the development of a greenfield site.
“From the taxpayer’s point of view, a redevelopment project that reuses existing areas makes a lot of sense,” Kolata says. “If you continue to grow outward, you have to keep building new infrastructure. Outward expansion also means longer commutes, relocation expenses, increased gas expenditures and extension of services. ”
‘We’re way ahead’
Besides allowing the City to pay off one bond well ahead of schedule, development along the Ireland Road corridor has far surpassed other important milestones that were originally envisioned for the project.
For example, the creation of Erskine Commons alone has led to the development of more than 476,000 square feet of new commercial space, including Wal-Mart, Lowe’s and Gates Toyota. Some 740 new jobs have been created, generating more than four times the tax revenue that originally was projected.
What’s more, Erskine Commons has generated more than $60 million in returns over the original investment. Meanwhile, Erskine Village has generated some $70 million in returns beyond what originally was invested. And what was once a vacant shopping mall has again become a thriving center of shopping, attracting people from throughout South Bend, as well as communities an hour’s drive to the south.
“If you added up the money the City has put in versus what we’ve gotten in return, we’re way ahead,” Schalliol says.