Here is what Seneca Township resident Susan Handelsman, an ardent Tax Increment Financing District opponent, presented in Public Comment at Monday’s Woodstock Joint Review Board meeting.
Analyze TIF as a Promised Annuity beginning Payment in 23 years..
(Woodstock TIF 2 falls way short of price tag)
We can quantify the “something later” and the “something now”, based on projections in Woodstock TIF 2’s own plan. The description is similar to a promised annuity.
WOODSTOCK TIF 2 ANALYZED AS A PROMISED ANNUITY STARTING PAYMENT IN 23 YEARS
Woodstock TIF proponents are promising you taxing bodies something later in return for something now.
The “something now” is $47 million dollars which the Woodstock TIF 2 Plan empowers Woodstock City to borrow and pledge taxing authority to collateralize, borrow against and in so doing incur further interest cost; all in order to grant these funds as personal profits for private owners of land, consultants, attorneys and bond underwriters.
The use of funds for solely-TIF related purposes is relevant in that it produces nothing of value for taxpayers or EAV to be taxed later.
The “something later” is quite similar to an annuity.
Woodstock TIF proponents claim that in 23 years (or by law 35 years with an extension which is more difficult to stop than to obtain), you taxing bodies will have ‘new EAV’ creating a perpetual revenue stream.
This perpetual revenue stream can be quantified as:
Present value of annuity at 23 or 35 years.
Let’s quantify the best-case scenario PRESENT value of the annuity at 23 years.
Bear in mind that this is best case scenario with you taxing bodies completely disregarding the burden placed upon NON-TIF taxpayers to subsidize the TIF free-riders over the next 35 years.
You might want to consider that Woodstock’s current 4% property tax rate—
which compares to America’s average tax rate of 1.15% and Chicago’s and Illinois’ tax rate of ~2.3%
—that 4% property tax rate will rise necessarily as a function of subsidizing millions of dollars per year of TIF free-riders’ legally mandated social service provision.
When you run out of taxpayers willing or able to bear the burden of subsidizing TIF free-riders, from whom will you collect your desired levies?
Contained in handouts are supporting data for my assumptions.
The predominantly vacant parcels described in Woodstock TIF 2 Plan are compared against adjacent or nearby assessed values of parcels developed as described in Woodstock TIF 2 Plan. I rounded up and generously assumed highest use of land.
If all the Redevelopment Plan is executed perfectly, and executed immediately, here is the Present Value of the Promised annuity compared with the $47 million dollar price tag indicated by Woodstock TIF 2 planners:
Present value of annuity at Year 23: $34 million. (Present Cost: $47 million plus undisclosed interest rate costs and fees). They want you to pay $47 million at present, for something that is present-valued at $34 million.
There are cheaper ways to achieve actual EAV growth derived from development rather than inflation.
The methods are within Woodstock City’s means.
They just need to hear from citizens and taxing bodies that we understand what they are up to with this TIF, and that we don’t take kindly to this financial exploitation.
Susan Handelsman 815-540-7526 firstname.lastname@example.org
p.s. The extra projected EAV is derived as a function of naturally occurring inflation on the Frozen initial TIF EAV.
You all would have gotten to tax that all along the first 35 years, but-for the TIF.
Pps. Sales tax or use tax is a small number relative to diverted property taxes.
You can derive this easily: median household income $60,000.
Per Bureau Labor Statistics Survey: household income spent 23% on sales taxable goods and services.
Assuming the ludicrous amount of 100% of that being spent within Woodstock rather than online or elsewhere, you get 449 new households adding, at 1% sales tax, $62,000 annual revenues to City of Woodstock.
A few other retail sales locations may be developed, but are subject to incremental sales tax TIF diversion.
For that matter, Walmart PIN is still included in TIF Plan (13-16-201-008).
Incremental sales tax TIF diversion from Walmart will swamp any minuscule sales tax revenue gains from development.
Sales (use) taxes, replacement taxes, and utility increment taxes obtained by TIF are dwarfed by the millions of dollars of additional social service provision expenses engendered by new TIF housing units, and required to be paid by other taxpayers than new TIF free-riders.
These additional tax burdens are NOT addressed by TIF proponents, nor are the deleterious economic effects engendered by tax rate increases in the future 35 years which would NOT occur BUT-FOR the TIF.
The important figure for taxing bodies to remember is this:
Why would you vote yes to pay $47 million for a promised annuity that if all goes well is only worth $34 million at present value?
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Here is McHenry County Blog’s article on the TIF meeting.