Local Redevelopment Authority:
Grappling with Regulations and Water/Sewer System Question

By MICHAEL MILLER | For The Prairie Advocate News

SAVANNA – In the first part of a series on the Savanna Depot Park Local Redevelopment Authority (LRA), and Carroll County Board member Paul Hartman took some time out to discuss some of the history of the group, as well as it’s purpose and operational dynamics. Hartman, the liaison officer between the two entities, also spoke to some of the financial and other issues that the LRA is dealing with, including the recent sale of the LRA’s water and sewer systems for the sum of one dollar.

The United States Army owns the water and sewer systems at the Depot Park and allows the LRA to lease the land and buildings in that area contingent upon the Army passing control over to the LRA, and depending upon what’s underground, what type of cleanup procedures would be required to conform to all federal and state regulations. The Army then transfers property after the cleanup procedures are complete and the whole process is signed off by the Army Corps of Engineers, the Illinois Environmental Protection Agency and the Federal Environmental Protection Agency. Hartman says if you don’t go through these agencies, the property will never get cleaned up and no money will be allotted for these processes.

The complexity and time issues associated with these processes are hard to overestimate. Some areas of the Depot may take up to 32 full years to clean up.

Since 2008, the LRA has not had any property go through this process that has been suitable for sale.

Hartman says you can’t “cherry pick” which properties get cleaned up first. But the LRA does get to choose which property already available to them for cleanup (based on specifications from the Army) should be prioritized, and they base this on tenant interest. The LRA then leases the property in question to the interested party, contingent upon the process later on.

Again, the LRA tries to gauge the seriousness and realistic viability of the business when leasing property. He says that initially a lot of prospective owners presented business plans that were wildly unrealistic in terms of projected employee hires and economic outlook. Over time, he says, the LRA has become better at sizing up those who have a good chance of success versus those who merely hope for success.

“Most people come into it with a little capital and hope it will work, and it just doesn’t, and that’s the unfortunate part,” Hartman says.

The LRA receives revenue from the sale or lease of property, but Hartman adds that if they sell a property as opposed to leasing it, they lose a source of income because once the sale is over there is no money coming in from leasing.

The viability of the current property owners and businesses in the Depot Park is of particular interest to Carroll County, as Hartman reports that fully 90 percent of those currently utilizing the LRA water/sewer system are Carroll County companies.

Water/Sewer Woes

Successfully utilizing a piece of property requires many elements to fall into place. You need to be able to match your property to your needs, you need to be able to finance whatever endeavors you engage in on the property, and you need certain basic services, among them, heat, electricity, more than likely television and internet connections, and of course, a functioning water and sewer system.

Recently the LRA signed a purchase agreement to sell its water and sewer system for the sum of one dollar. The move was occasioned by the harsh reality that the system has been operating at a $70,000 annual loss, and at that rate the LRA would no longer be able to operate or finance the system by the year 2017. Without such a system, the LRA would not, according to Hartman, be able to fulfill it’s stated purpose of providing economic redevelopment of the depot.

With the LRA apparently unable to financially sustain the systems for more than a very limited amount of time, the LRA Board was tasked by the Carroll County Board to come up with a list of alternative plans for the system, motivated by the County Board’s desire to avoid financial responsibility for these systems in the inevitable event that the LRA could no longer support them. (The costs to support these systems would fall back on the counties should the LRA ever be dissolved).

Several alternatives were discussed, and subsequently rejected for various reasons. LRA attorney Phil Jensen composed a list of such alternatives and presented them to the LRA Board in 2007. They included having both Jo Daviess and Carroll Counties maintain the systems as part of a “combined waterworks and sewer system.” However, Jensen opined this option would more than likely not be approved by the two County Boards (which would need to approve such a measure before it could become a reality).

The two counties could create two “special service areas” and then jointly manage the two areas by means of an intergovernmental agreement, but like the first option, Jensen felt that approval by both both county boards was unlikely.

The LRA could also have sold the systems to an existing or newly formed utility company, but it was found there was no interest by such entities (though overtures were made for such a move, apparently).

A Property Owner’s Association could have been formed from the existing property owners and tenants at the Depot, which would then own and operate the systems jointly as a “mutual concern.”

As time passed, the counties narrowed down their realistic options to just four; selling the systems to a utility, establishing a property owners’ association, the establishment of a port authority, or simply abandoning the systems altogether.

Hartman says that while at least one utility was indeed approached, none were interested in purchasing these systems, nor was the City of Savanna, another logical candidate. He says he understands why a municipality wouldn’t be interested in purchasing a system designed to service a community of 5,000 when you currently only have 15 customers.

Next:

A buyer steps forward, but not everyone is pleased with the decision to sell the systems.