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The 1980s era joint venture between Northwestern University and the City of Evanston to develop a “research park” between Davis Street and Emerson Street and between the two rail tracks folded more than a decade ago, but some lingering aspects of the deal linger to this day.
One provision of the original 1986 agreement between the City and the University required City approval for any and all sales of real estate within the research park borders to a tax exempt entity. The idea behind the agreement appeared to be to ensure that property tax revenues on such real estate would continue to stream into City and school coffers.
In March of this year, City Council agreed to enter into a Memorandum of Understanding (MOU) with Northwestern in conjunction with Northwestern’s purchase of a parcel of property in the research park – 1840 Oak Ave., across from the parking lot in which the downtown farmers market is held. Council approved the MOU, without discussion and on the consent agenda, at its Nov. 27 City Council meeting.
Under a resolution passed in March, the City agreed to allocate the portion that would have gone to School Districts 65 and 202, roughly two-thirds of the $350,000, to the school districts.
Under the MOU, Northwestern will provide “annual voluntary payments” to the City in lieu of property taxes the City would have received from three properties: 1840 Oak Ave., 630 Clinton Place, and 2522 Orrington Ave. A January letter from Nim Chinniah, a Northwestern Executive Vice President, to then-Mayor Elizabeth Tisdahl, describes the payments.
“To protect and preserve City revenues and demonstrate our commitment to the City of Evanston and Evanston schools, Northwestern commits to making annual voluntary payments each December in the amount of $350,000 to the City.” The letter does not explain how the University arrived at this figure.
City staff’s memo accompanying the MOU, however, says the January letter amounts to “the University’s commitment to pay annual payments to the City every December in an amount corresponding to the property tax revenues that would otherwise be received and disbursed from property taxes paid and collected from 1840 Oak Ave., 2522 Orrington Ave., and 630 Clinton Place. (To recap, the current payment amount for these three properties is $350,000 per year.)”
Section Three of the MOU, if agreed to by Northwestern, says only that the payments will be in accordance with the terms of the January letter. “[T]he payments discussed in this paragraph will be evaluated annually by the University in order to ensure that the University’s commitment to protect and preserve the City’s revenues and demonstrate its commitment to the City of Evanston and the Evanston schools as set forth in Exhibit B is met… If an adjustment to the voluntary payment is needed, such adjustment will be calculated using the same methodology as was used to calculate the voluntary payments provided for in [the January letter]. The parties agree to reasonably cooperate regarding such voluntary payments.”
The MOU also provides that any additional properties acquired by Northwestern within the former research park borders will also pay a similarly calculated Payment in Lieu of Taxes.
The matter passed without discussion and on the Consent Agenda on Nov. 27. While it is clear Northwestern agreed to pay $350,000 each year, the annual adjustment could become a sticking point.