BLOOMINGTON - When the city of Bloomington made a commitment to invest $54 million in two major downtown building projects, the hope was they also would revitalize the city's core. | Multimedia & more

Functioning like two anchor tenants at a mall, U.S. Cellular Coliseum and the Bloomington Center for the Performing Arts have attracted more than 450,000 visitors to downtown in the past year.

But the entertainment venues have done little to help improve the climate along the streets between the two facilities. Storefronts remain vacant, retail struggles, and the area lacks attractions to make it a daytime destination. One developer said it's easier to find lawyers to rent his storefronts than retailers.

There is uncertainty about what the next steps will be, and the City Council's focus on addressing the financial losses at the Coliseum appear to distract it from other downtown problems.

Also looming is uncertainty over how any future improvements will be funded.

The downtown's long-running gravy train - money collected from a tax increment finance district - helped generate more than $36.4 million in improvements to the area in the past two decades. But that money is set to dry up in 2009, and few alternative sources have emerged.

As the city considers what it will do about the future of downtown, one thing is clear to Alderman Karen Schmidt.

"Bloomington needs a much more aggressive economic development strategy for downtown," said Schmidt, whose ward includes a large part of downtown. "And it has to happen out of City Hall."

The future needs money

As it ponders downtown's future, the City Council must consider how to pay for it. For the past two decades, Bloomington has relied on its tax increment financing district to generate money for downtown redevelopment. In a TIF district, the revenue generated is put into a special fund for redevelopment, rather than distributed to other taxing bodies.

Since the downtown became a TIF district in 1986, the city has provided $8.9 million in financial help to developers. They in turn have funneled another $27.4 million in private money into the area. The public-private projects have included major downtown renovations as well as small businesses and restaurants.

In recent years, the TIF district has generated about $1 million in annual revenue. That money is currently committed to projects that include the Ensenberger condominium development and rehabbing upper floors of the Castle Theater.

As the 2009 deadline approaches, the city and the Downtown Bloomington Association are in talks with District 87 officials to extend the life of the TIF district. About $700,000 of the expected annual revenue will go to the school district once the TIF expires.

Sales tax help?

"It is not in the best interest of the school district to continue with the TIF district without some kind of compensation," said District 87 Superintendent Bob Nielsen.

An alternative funding source under consideration is to use money from an existing quarter-cent local sales tax, although it's already earmarked for a range of other downtown expenses.

That tax generates about $2.4 million annually, with about $1.6 million set aside to underwrite the Bloomington Center for the Performing Arts. The remaining $800,000 pays for the Pepsi Ice Center, the Coliseum parking deck and other downtown projects.

When the sales tax was approved in 2000, the City Council suggested $600,000 of the anticipated revenue be set aside for downtown improvements after the TIF district expires.

City Manager Tom Hamilton said whether that happens will be up to the City Council in 2010. And, whether that will be enough to meet downtown needs also is uncertain.

"It depends on how you want to circle the wagons," Hamilton said. "If you look at the 23 projects funded already by the $9 million in TIF funds, it should be enough."

Schmidt also wonders if the city needs another quarter-cent hike.

Coliseum distraction

But aldermen have had few discussions about these issues.

Instead, they have been focused on stopping the financial hemorrhaging at the Coliseum. In its first year, the facility lost $2.5 million and losses in the first two months of this fiscal year are nearing $500,000.

For now, the city has made budget cuts to cover the unexpected expenses.

Mayor Steve Stockton said the much-talked-about idea to build a downtown hotel to increase convention business at the Coliseum has been put on the back burner because the council is simply too busy trying to get a handle on the arena's finances.

But not everything has been side-tracked. Of the four areas the mayor said are key to downtown success - employment, entertainment, residential and retail - notable progress has been made in all but the last one.

"We're done on three of them," Stockton said. "We have already paid enough attention to the entertainment venues, don't you think?"

Business plans

But Hamilton said before any decision about retail needs can be made, a marketing study must be done. He said getting a major retailer such as Pottery Barn or Crate & Barrel would be a huge coup for downtown, but also one that would come at a price.

"Would the council be willing to underwrite the operating losses for a business' first years in business?" he asked. "That is a very real cost the council will need to consider if they want bring that kind of development to downtown. What is realistic given what has developed here, its employment and its traffic base?"

In the meantime, existing businesses may need to become more self-reliant.

As part of its five-year plan, the Downtown Bloomington Association wants to create a business improvement district to pay for downtown marketing and business recruitment.

Executive Director Peggy Flynn said a business improvement district would include a special fee charged to downtown property owners, but she couldn't predict whether it would be $5, $50 or $500. A similar effort in 2001 went nowhere.

In Galesburg, a special assessment of downtown business owners pays for snow removal and finances renovation grants, said Steve Gerstenberger of the Galesburg Downtown Council. Downtowners are taxed 2.5 percent of the equalized assessed value of their property, so the owner of a $150,000 building pays $1,250.

"At some point, downtown business owners need to manage themselves," Hamilton said. "We are helping them get off the ground by funding the DBA, but at some point they have to do it and be self-sufficient."

More: Watch/listen to multimedia interviews and read more stories.

---

Downtown dollars

An estimated $36.4 million has been invested in downtown Bloomington redevelopment since a tax increment financing district was created in 1986. The district is set to expire in 2009, and city officials are unsure how the redevelopment revenue will be replaced. See listing