A press release from School District 300:
New Sears EDA legislation lacks accountability, transparency, and efficiency
SPRINGFIELD – District 300 leaders discovered this afternoon (Monday, Nov. 7) while at the State Capitol that poorly written legislation had been hastily filed earlier today to extend the Sears Economic Development Area (EDA) for another 15 years without requiring
- transparency or
House Majority Leader Barbara Flynn Currie filed Amendment 2 to Senate Bill 397 today.
This legislation is intended to provide incentives to Sears and the Chicago Mercantile Exchange (CME) to stay in Illinois.
However, a preliminary review by D300 officials today reveals massive waste in the distribution of tax dollars with no attempts to correct the current lack of oversight in the EDA.
“The bill filed today is horribly wasteful in reaching its goal of keeping Sears here, and it might as well be renamed the ‘Hoffman Estates EDA’ bill,” Superintendent Michael Bregy said.
“If the state wants to provide incentives specifically for Sears, that’s fine. But it’s definitely not fine to legalize the use of school property taxes to run an entertainment complex, such as the Sears Centre Arena. This legislation is an attempt to legalize something that is now considered a criminal act. If passed, it would set a horrible precedent for the fairness and transparency of the Illinois taxing system.”
The biggest winner in the bill is the Village of Hoffman Estates, for these and other reasons:
The legislation will allow the Village to use EDA funds (i.e. school property taxes) to buy and operate publicly owned buildings in the EDA, including the village-owned Sears Centre Arena, despite strong objections by over 11,000 petitioners and D300 leaders.
If this part of the legislation is truly about the village fire station within the EDA, as Hoffman Estates has publicly claimed, then legislators should specifically prohibit the use of EDA funds to buy/operate the financially struggling Sears Centre Arena. By using school property taxes to float the Sears Centre Arena, the Village would be protected from having to ask its own taxpayers for a tax increase.
The legislation will give the Village an estimated $93 million over 15 years, which is even more than the $5 million per year the Village now receives to “manage/administrate” the EDA.
A majority of this $93 million will come from D300 school property taxes.
Furthermore, this is $45 million above and beyond what the Village would have gotten if it had received 100% of the village property taxes paid by the businesses within the EDA.
If Sears moves away at any point in the 15-year plan, the legislation will allow Hoffman Estates to continue receiving $5 million a year from the EDA, above and beyond the Village’s normal tax revenues.
The legislation will not require any outside (State Comptroller) audits of the EDA, such as are required of Tax Increment Financing (TIF) districts.
There has never an audit specifically of the EDA since the EDA was established by the state in 1989. Hundreds of millions of EDA tax dollars have never been subjected to outside review, and this legislation would allow this lack of accountability to continue for another 15 years.
The legislation will not require any oversight by a Joint Review Board, such as is required of TIF district. A Joint Review Board is comprised of representatives from the affected taxing bodies.
Both in the current EDA and the newly filed legislation, the local taxing bodies have no voice and no seat at the table.
Superintendent Bregy said he was pleased to see that the legislation would penalize Sears if the company leaves Illinois before 2018.
“We support the portions of this new legislation that provide incentives directly to Sears and penalties if it moves its headquarters out of our school district,” Bregy said.
“That appears to be the one and only responsible portion of this otherwise appalling legislation.”
However, the district is concerned that the legislation does not specifically cap the amount of funds that Sears can take in from the EDA.
Sears had told lawmakers and D300 officials as recently as two weeks ago that its financial goal from the EDA legislation was to recoup $125 million in investments it had made in the EDA area.
D300’s cursory analysis of the newly filed bill is that Sears could receive up to $173 million.
D300 currently receives $2.9 million of the roughly $16 million in D300 school property taxes paid by the businesses within the EDA. At that rate, D300 would have received $43.5 million from 2013 to 2028.
The new legislation would give the district $89 million. However, we will lose $150 million in school property taxes – about half of which would appear to go directly to the Village of Hoffman Estates, and the other half to Sears, further illustrating the rampant waste in this legislation.
Under the new deal, Sears would receive both state tax credits and EDA funding as incentives to stay in Illinois.
Ironically, the CME portion of the deal doesn’t take Chicago Public School taxes to support the CME, while the Hoffman Estates/Sears portion relies heavily on D300 school property taxes.
Superintendent Bregy and other D300 community members are currently pushing legislators to rewrite the newly filed legislation.
Amendment 2 of Senate Bill 397 will be discussed by the House Revenue & Finance Committee on Tuesday morning. If the committee advances it to the full house on Tuesday , the Senate could take up the issue as early as Tuesday afternoon.
A final decision could come at any point this week.
The following are links to the legislation: