This is part two of bond analyst Steve Willson’s reasons for opposing the Lakewood Tax Increment Financing District.
My second objection: the MISUSE of TIFs — how they are abused in practice.
TIFs are supposed to be used only in blighted areas, and only where there is strong evidence that no development will occur unless there is a TIF.
They were meant for areas like the south side of Chicago.
The reasons for these supposedly high statutory barriers are (1) to keep politics out of the process and (2) to keep municipalities from — pardon my French — screwing all the other local governments out of their property taxes.
The area designated by the Village Board for the TIF district consists of virgin land at 47 & 176 and the Crystal Woods golf course.
Is this area blighted?
But the Board designated this area as “blighted”, which was good enough for their lawyer.
This sleazy act violates the purpose and spirit of the law.
It is an abuse.
And is this area likely to remain undeveloped for 23 years?
Gene Furey himself said so in public.
So what did the Board do?
They hired a sham consultant to say the district met the law’s requirements.
I asked the Board three questions about this consultant:
- How many TIF districts has the consultant REVIEWED?
- How many TIF districts has the consultant APPROVED?
- Does the consultant have any evidence the approved TIFs resulted in development that wouldn’t have occurred anyway?
The Board didn’t know the answers to any of these questions.
They didn’t want to know.
Again, they failed in their fiduciary obligation to the public.
And the answers were:
- 50 and,
In other words, the consultant has reviewed 50 proposed TIF projects, approved all 50, and has never done any work to determine if the districts actually met the law’s requirements.
Statistically, even if 90% of all proposed TIFs were effective, the odds that this consultant would find 50 out of 50 good ones is 0.5%.
Given the strong evidence that TIFs don’t actually work, the odds of 50 out of 50 are actually smaller than one in a trillion.
And if the Board is wrong, if development would occur in several years without a $130 million TIF ($66 million amortized over 23 years with interest), then the local school district will miss out on as much as $100 million in property taxes.
If development would have occurred in five years, then the school district would miss out on 18 years of taxes.
If development would have occurred in ten years, then the school district would miss out on 13 years of taxes.
The Village Board doesn’t care.
This beggar-thy-neighbor attitude is horrendous public policy.
= = = = =
The Lakewood Village Board meets at RedTail Golf Club Tuesday
- at 6:45 for a budget hearing
- at 7 for a regular meeting, the most important item, seemingly, approval of the budget.
I’d link to the proposed budget, but I can’t find it online.