The following was written by Steve Stanek. His experience with Tax Increment Financing Districts goes back at least as far as the one then-McHenry Mayor Pam Althoff championed and probably further since the life-long McHenry County resident has been tracking tax increment financing since the 1980s.
TIF District Arrogance [my title]
No one knows what will happen more than 20 years in the future.
Yet Lakewood officials have claimed that ability by creating a huge Tax Increment Financing district near Routes 47 and 176.
It’s an ability municipal officials arrogantly claim every time they create a TIF district.
Think of some of the things that did not exist 23 years ago, the standard length of time a TIF district lasts – iPhones, high-definition TVs, Facebook, Google . . . and the taxpayer-subsidized Motorola cell phone plant in Harvard.
Local officials gushed like schoolgirls at the flood of tax dollars, jobs and development the facility would bring when it opened 18 years ago.
Instead, this 1.5 million-square-foot building has stood empty nearly 12 years, twice as long as it was in use.
Lakewood officials are making similar lofty claims for their TIF district.
Don’t be surprised if it has similar dismal results.
Lawmakers invented TIF more than 30 years ago to redevelop blighted areas, which were defined as having chronically high rates of poverty, crime, unemployment, dilapidated and abandoned buildings, etc.
TIF areas freeze property taxes that go to local taxing bodies. As property values rise through inflation and redevelopment, the increase in tax collections – the “increment” – pays for the TIF projects.
Real estate developers soon began twisting the law to their advantage, and government officials went along.
Today one-third of Chicago is in TIF districts, many of them in wealthy parts of the city, including the financial district where the Chicago Mercantile Exchange and Federal Reserve Bank of Chicago are located.
On the North Shore of Lake Michigan, home to some of the wealthiest communities in the Midwest, a TIF district included a Ferrari/Maserati dealer.
In the Lakewood case, officials resorted to TIF’s “but for” finding – but for TIF no development would occur.
It’s a laughable claim. Lakewood Trustee Gene Furey admitted as much during the village’s TIF meeting when he told the audience,
“One way or another, there’s going to be development on Route 47.”
[See story here.]
No one should be surprised when TIF consultants say an area qualifies for TIF.
Promoting TIF is how they make money.
This is why they find blight and no prospect of development in Chicago’s high-rent financial district, posh suburbs with Ferrari/Maserati dealers, and near Routes 47 and 176.
Lakewood officials say they’ll use TIF to extend sewer and water services.
Across McHenry County people own property in “special service areas” that charge extra taxes for extending sewer, water or other services.
They pay tax on top of tax.
Most developers also put in their own infrastructure in addition to paying taxes.
But with TIF they don’t pay extra for those amenities.
Instead, their normal taxes fund them.
Wouldn’t you like your normal taxes to pay to upgrade your home?
TIF too often is a corporate welfare racket run by people who act like little empire builders and who probably would not have been elected if they had revealed their plans to reshape their towns.
Understand [emphasis added below]:
TIFs are stealth tax increases.
To make up for this, the taxing bodies raise taxes on the rest of us.
The Washington, D.C.-based Tax Foundation has documented that McHenry County in 2010 (the most recent year with full information) had the 24th-highest average property tax burden in the nation.
TIF districts sprouting like mushrooms are one reason why.