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Moline considers $4 million in bonds for Shamsie projects
Originally Posted Online: July 27, 2009, 8:42 pm
Last Updated: July 27, 2009, 10:03 pm
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By Dawn Neuses, dneuses@qconline.com
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MOLINE-- The city may take out $4 million in bonds for developer Mike Shamsie projects. Half of the sum would cover $2 million in bonds already taken out for One Moline Place, with the remainder covering another $2 million Mr. Shamsie owes Northwest Bank and Trust. The bank payment will lead Northwest Bank and Trust to finance asbestos removal from the former nurses dormitory and demolish the building on the west side of 6th Street. The removal is expected to begin in mid-August. Once the site is cleared by the Illinois EPA and all rubble is removed, Mr. Shamsie will give the land to Moline, city administrator Lew Steinbrecher said. The Moline committee of the whole will review the agreement with the bank at its 6:30 p.m. meeting today on the second floor of city hall, 619 16th St., Moline. Mr. Shamsie is involved in One Moline Place, a residential development between 4th and 8th streets and 5th and 11th avenues. The project was announced in 2002 by Mr. Shamsie, a principal owner of Moline Place Development after he bought the former Trinity Medical Center East Campus for $1 million. In 2003, Moline took out a $2.4 million bond to fund infrastructure needed to develop the project. The city also created a Tax Increment Financing district to cover the cost of the infrastructure. In a TIF, any increase in taxes due to the increased property value created by development can be used for public infrastructure or rebates to developers. For One Moline Place, the increased property tax revenues were to pay the principal and interest payments on the bond. Mr. Shamsie guaranteed the city that, if the project did not produce enough increment -- which it has not -- he would personally cover the principal and interest payments. The city has made most of those payments, mainly through loans from the general fund. The project, which only developed with 25 housing units on the east side of 6th Street, is now generating $150,000 in incremental property tax revenues, according to Mr. Steinbrecher. Last year, however, the principal and interest payment on the bond was $240,000, with the city making up the difference. In all, Mr. Shamsie owes the city $916,929.90 in principal and interest payments, Mr. Steinbrecher said. Under the new plan, Mr. Steinbrecher wants to extend the TIF for 12 more years, until 2035, on the east side of 6th Street to pay for the new $4 million bond which would be issued later this fall. He said new plans for the land -- there is a developer for the 30 remaining lots in Phase I -- will generate about $10 million in new residential development in the next eight to nine years. Mr. Steinbrecher said the new property tax revenue collected because of the development is expected to double to $300,000 in five years and increase thereafter.The city only needs $250,000 a year to pay off the bond, the remaining money will be used to pay off Mr. Shamsie's debt to the city. Once the dormitory is torn down, Mr. Steinbrecher noted, property values are expected to rise in One Moline Place, resulting in the city collecting even more property tax revenue. "This is a very successful project and we have not even counted any of the housing on the west side of the street," Mr. Steinbrecher said. "That is another huge benefit -- we acquire control of the land and we can direct its future development. It is a good deal for the city." 
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