Bond analyst Steve Willson, a Lakewood resident, put together his take on what happened at the public hearing on the ChicagoLand SportsPlex. You may read it below:
A Summary of Lakewood’s Public TIF Meeting
Village: Thank you for coming to our information meeting. We value public input.
* You have already made up your minds and have no intention of changing your minds no matter what evidence is offered. The meeting was for public relations purposes and failed at that.
Village: If we don’t offer a TIF, development will never happen.
* Development happens all over the country without TIFs.
Village: But we know this is true in this particular case because every developer approaching us has asked for a TIF.
* Businesses always ask for tax breaks and claim nothing will happen without them.
Village: But development hasn’t happened yet without a TIF. That proves a TIF is needed.
* The same claim could have been made about the land along Randall Road twenty years ago or about any undeveloped property.
* Lack of development to date only proves development doesn’t make economic sense on its own, which is why a government subsidy is being sought.
Village: The development will provide increased taxes because of excess TIF revenues.
* That will be true only if the business succeeds. One color poster and speeches from the developers that they have rigorously investigated the profitability of this venture do not constitute proof.
Village: The TIF Eligibility study shows the project is likely to succeed.
* The Village’s TIF eligibility study says only that the TIF is legal, not that this project is likely to succeed nor that this TIF is good public policy. Your consultant gave the answer he was paid to provide.
Village: The developer has provided strong evidence the project will succeed.
* Studies provided by the developer hardly constitute proof. They have a vested interest in finding consultants who will say their business will succeed.
* This is not a modest-size or typical project, it is a mega-development for a very unusual business venture. The unusual nature of the venture indicates the project is speculative and has a low probability of success.
* This is a project that has been attempted several times over the last five years and has never found financing. The project’s unsuccessful history indicates it is speculative.
* One major factor in the success of a business is sufficient capitalization — equity. Does this project have equity? No, in has no equity. They can’t even afford to pay $70,000 for the Village’s out-of-pocket costs. The backers expect to borrow more than 100% of the cost of the project (hard costs + soft costs + capitalized interest). Lack of equity is a strong indication of a speculative business venture.
* Their business plan is to run a seasonal business in youth sports that depends on attracting teams from far away for weekly tournaments. Teams from far away will not come to this facility for practice. Local teams will not use these facilities for practice because they have places to practice. The sole reason to come to this facility is for tournaments. To succeed, they will have to take market share away from other facilities for youth sports tournaments regionally and nationwide. The facts are that the number of young people in this area and in the country as a whole is in decline and participation in youth sports is also in decline, so the number of potential participants is highly likely to decrease in the future.
* The eligibility study says you can sell $66 million in TIF bonds that mature over 23 years. To repay that amount, this project would have to produce more than $3.5 million in property taxes annually before the Village or local schools see an extra dime. That implies a market value of more than $150 million. How likely is this based on the foregoing?
Village: This development will stimulate other development that won’t require a TIF, resulting in property tax revenues we would not otherwise see.
* The historical evidence contradicts this assertion. All independent TIF studies show this is a rare event and studies by TIF organizations show only that businesses locate where subsidies are offered, not that the local governments usually obtain any excess revenue in anything less than 20 years.
Village: We are only financing infrastructure improvements, not the project itself.
* The TIF eligibility study shows $66 million in potential expenses, only $15 million of which is for public infrastructure.
Village: We are not putting any taxpayer money at risk.
* Haven’t you already spent $70,000 that the developer’s couldn’t pay for?
* Aren’t you waiving hundreds of thousands of dollars in fees?
* Won’t this project increase governmental costs without paying taxes for 23 years?
* Didn’t you buy a piece of land for several hundred thousand dollars with taxpayer money with no clear plan to sell it for a profit?
Village: Buying land is economic development, not real estate speculation.
* Buying land and hoping to sell it for more in the future is real estate speculation. Calling it something else does not change the reality of what you’ve done.