Ted Smith has more the say in his interchange with Steve Willson about the value of the Lakewood Tax Increment Financing District and the proposed SportsPlex:
Steve:
I appreciate your cogent response.
There are few homes in the TIF district now (i don’t know the exact number, but it is 1 per parcel) so there are about 20 homes in the TIF district now and I do not know if they have children going to D200.
So I agree with you, that in a static scenario D200 will not receive any tax revenue above what they receive today.
However, if business buy those (sportsplex, walmart whatever) those existing homes will be torn down and the impact will be negligible or zero to D200.
The issue relating to the schools is whether there will be new residential construction in the TIF district.
As far as I can piece together, the boards intention is to make the TIF district primarily business to bring in sales tax dollars I (possibly incorrectly) presume that there will be very little residential development in the TIF district.
Possible ways to spend the Lakewood TIF bond money includes “Affordable Housing Construction.”
So the impact to D200 will be small if not zero.
I’m glad we are on the same page in desiring development at 47/176.
It seems a natural, non intrusive place for business development.
I would like to see the development happen sooner, rather than later.
If a business builds now (any business, I am not specifically talking sportplex) it is better for the village and the village residents from a sales tax revenue perspective than if a business builds 10 years from now.
Being a bond guy, I know you are all too aware that a dollar today is worth more than a dollar tomorrow.
So, to accelerate that development I am not against the village creating incentives to attract business now.
Those can take many forms; waived fees, tax abatements and in this case a TIF.
Again, not talking about the Sportsplex or the specific merits of TIFs, don’t you agree that a subsidy will attract businesses sooner rather than later?
As to the Sportsplex:
I agree that this type of business is ridiculously risky.
I would not invest in it myself.
However, I don’t think that because a business is risky should preclude its presentation before the board.
I do not know what type of reserves and covenants the underwriters have placed on the sportsplex.
So while I agree that a sports venue is risky perhaps the complete package mitigates those risks, I honestly cannot judge with incomplete information.
I do think that a complete package deserves and up or down vote by the trustees with full awareness of the financial implications.
Myself, I’d rather see big boxes and car dealerships there for sales tax revenue, but that is not the “vision” of the village.
The vision is more bike paths, trees and green open space.
Because of this underlying vision I think the trustees et al are being receptive to hearing the Sportsplex (soccer and baseball fields work with green open space) case whereas other communities might throw them out on their ear.
Like you, I am a free market guy and believe in letting the market drive things.
However, I am also a business guy and know that reduced prices (sales, coupons, incentives) accelerate activity.
The village is “selling” development within the village.
To accelerate that development they are using TIFs to provide subsidies to the businesses within the TIF.
I also believe that the village will use TIF funds to pay for their own infrastructure costs.
So yes the businesses within the TIF win and the village infrastructure wins.
I believe those are the only legitimate uses for TIF funds.
However, the business that was attracted to the village because of the TIF will be paying sales tax revenue to the village so all the village wins.
I am willing to offer incentives to attract businesses.
You are not.
We can agree to disagree on that point.
I am interested in sales tax revenue sooner rather than later.
The subsidy approach improves the possibility of sales tax revenue.
Your approach does not.
Factually inaccurate premise.
An enormous portion of the tif area is zoned residential in Lakewood’s published plans.
The tif provides a convenient location for low income housing.
Lakewood is supposed to have 10 % affordable housing, it has around 2.6%.
Lakewood is trying to dump costs for education of tif children onto D200 taxpayers.
This can be avoided by petitioning (the residential portion of the tif) for detachment.
Lakewood has 1367 occupied dwelling units (from 2010 census)
137 need to be affordable (10%)
Lakewood currently has 37 affordable units (from 2010 census) so 100 units need to be built.
Average family size in Lakewood rental units is 3.26 (from 2010 census, assume 2 adults & 1.26 kids)
Woodstock D200 spends $11,675 per pupil (from D200 website)
Assume all 100 affordable units are built in the TIF district
Cost shifted to D200 taxpayers: 100 x 1.26 x $11,675 = $1.47mil per year = $33.8mil per 23 years
The amount Woodstock CUSD 200 spends per pupil does not all come from property tax dollars.
It’s a mixture of property tax, state, Federal, grants, and various other revenue sources such as fees and such.
The breakdown is found in the school district budget, amongst other sources.
The school district budget is found on the school district website and the Illinois State Board of Education (ISBE) website.
Here are the revenue sources from the Fiscal Year 205 (FY 2015) Woodstock CUSD 200 budget.
Local Sources – $64,956,317 (64%)
State Sources – $18,893,317 (19%)
Federal Sources – $5,815,573 (5%)
On Behalf Payments – $12,049,391 (12%)
Total Sources – $101,714,598
On Behalf Payments are certain grants and other financial assistance.
http://www.woodstockschools.org/sites/default/files/woodstockschooldistrict200/document/SDB2015FORM092514.pdf
Note, the Total Sources of revenue and the Cost per pupil figures do not include the State of Illinois Contribution to the TRS Pension Fund.
For FY 2014, the State of Illinois Contribution to the TRS Pension Fund was $3,438,382,892.
For FY 2015, the State of Illinois Contribution to the TRS Pension Fund was $3.413 Billion.
(that’s likely a rounded number)
http://trs.illinois.gov/press/financial.htm#fy14contribution
In FY 2012, the last year for which such statistics are readily available without FOIA, per the ISBE TSR, Wooodstock CUSD 200 was approximately .0030191458% of TRS employees (some employed by the unions aka substitute teach for a day to become eligible to contribute to TRS) and probably some others are not included in the TSR.
$3,438,382,892 x .0030191458 = $10,380,979 FY 2014.
$3,413,000,000 x .0030191458 – $10,304,344 FY 2015.
Note again the fractional percentage of Woodstock TRS contributors is 2012 data and not 100% accurate as it doesn’t include at least a few TRS contributors.
However, we now have an idea how how much additional state aid CUSD 200 is receiving for education in the form of pension contributions.
Here is the funding for Woodstock CUSD 200 education using the “hidden” state contribution to the TRS pension fund costs which are never disclosed in public education funding figures.
Local Sources – $64,956,317 (58%)
State Sources – $18,893,317 (17%)
State Contribution to TRS Pension Fund – $10,304,344 (9%)
Federal Sources – $5,815,573 (5%)
On Behalf Payments – $12,049,391 (11%)
Total Sources – $112,018,942
Comparing the sources of revenue, with and without the state contribution to the TRS pension fund.
Source ——– With State TRS Pension Contribution – Without State TRS Pension Contribution
Local Sources – 58% – 64%
State Sources – 17% – 19%
State Contribution to TRS Pension Fund – 9% – 0
Federal Sources – 5%
On Behalf Payments – 12%
So when teachers and administrators say that the state does not contribute enough to education, remind them that 1) Illinois has amongst the highest local funding for education in the United States and 2) State funding does not include state TRS pension funding.
Also note the high employer / state costs to fund the TRS pension.
For FY 2014, the State of Illinois “on behalf of the Employer” Contribution to the TRS Pension Fund was 35.41% – .58% = 34.83%.
The school districts contribute .58% of the “Employer” contribution, and the state contributes the remainder the “Employer” “on behalf of the employer.”
The teachers and administrators will say this is due to the state not properly funding pensions over the years.
That is not the root cause.
The root cause of underfunded pensions is legislative pensions hikes WHILE PENSIONS WERE ALREADY UNDERFUNDED over many decades but especially since the sentence was added to the Illinois State Constitution stating pensions are contractual and cannot be diminished or impaired.
Teachers and administrators like to call that the pension protection clause.
It did not protect pensions.
It ruined pensions.
And it greatly inflated taxpayer costs for public education.
Teachers and administrators and their lobbyists advocated for and received increasing pension benefits and diverting pension funding to salary funding, because they thought their pensions were guaranteed irregardless of funding.
Now to fund pensions, Uniform Disposition of Unclaimed Property Act funds are going to pensions instead of social services.
Public Act 98-674
http://www.ilga.gov/legislation/ilcs/fulltext.asp?DocName=003001050K8.12
And, the proposed Governor’s budget has cuts to state funding for social services and increases to public education funding.
Finally, the teachers and administrators will say, the state contribution to the TRS pension fund includes the underfunded liability costs as well as this years “normal” costs.
That’s true, but as indicated above, that’s due to the teachers and administrators and their lobbyists advocating over the years for legislative pension hikes to PENSIONS THAT WERE ALREADY UNDERFUNDED, and diverting pension funding to salary funding.