From School District 200 resident Susan Handelsman:
WHERE DOES TIF MONEY COME FROM?
Mayor Brian Sager of Woodstock and a large team of highly compensated Financial Development department government employees assert that the money comes from TIF ‘Development’, NOT taxpayers (unless their property values rise).
Is that true?
Take a look at Woodstock TIF 1&2 data, then you decide how much Truth Family DNA is in Woodstock’s assertion.
Here is where TIF revenue comes from, in chronological order:
- TIF MONEY SOURCE 1: Day one (of 35-year legal lifespan) of Woodstock TIF 2: over $200,000 of taxpayer money is diverted to TIF 2. That TIF money was not due to development, but rather to tax on property value inflation between 2017 and 2018 assessments.
Inflationary tax increment would ordinarily go to taxing bodies. Because it must now go to TIF, it is a pure $200,000+ tax hike. That $200,000+ WILL NEED TO BE “REPLACED” by taxpayers to make taxing bodies whole.
That $200,000 tax hike will last for the 35-year life of TIF 2, compounding with inflation each year. All other inflationary EAV in the TIF area will also be diverted to TIF, and must be ‘duplicated’ by other taxpayers, for 35 years.
- TIF MONEY SOURCE 2: Day 2 of TIF 2: Bonds will be issued. Bond issuance is expensive, with underwriting fees and legal bills. Bonds will provide money for paying the high administrative costs of having a TIF in the first place. Also, Woodstock Economic Development department ‘needs’ immediate funds to pass out to TIF recipients right away. (TIF money from ‘development’ cannot begin for several years, due to the lag in property tax assessment and collections).
Bonds will likely (as in Woodstock TIF 1, and per statements made at 2 TIF informational meetings by Woodstock financial management team), be guaranteed by the full faith and credit of Woodstock taxing ability (which means, all ‘taxable’ taxpayers—NOT new TIF buildings—will be encumbered and responsible for all debt if TIF fails to produce enough revenue to pay off bonds).
PS: THIS APPLIES TO ALL THE $150,000,000 BOND DEBT COMING DUE IN THE NEXT 35 YEARS FROM WOODSTOCK D200, AND BIG DEBT of McHENRY COUNTY CONSERVATION DISTRICT, AND BIG UNDERFUNDED PENSION DEBT FOR POLICE/FIREMEN/EMTs/TEACHERS/ADMIN/OPEB FOR TEACHERS AND ADMIN/GOVERNMENT WORKERS/PENSIONS AND INSURANCE PREMIUMS OBLIGATED BY LAW…Capische? New TIF development property is legally able to evade that debt. All the money they pay in taxes goes to TIF…and TIF does its own thing, which includes payments to TIF properties.
- TIF MONEY SOURCE 3: development. That is, the new residential development which Woodstock described in informational sessions, and listed in TIF 2 Plan: 500-1000 new housing units built. This will create brand new TIF tax revenue. It will NOT create any new revenue for taxing districts for 35 years.
It WILL create new tax BURDENS for NON-TIF-DEVELOPMENT taxpayers.
Each housing unit in Woodstock is assumed, per Census, to host on average 2.5 humans. 30% of Woodstock residents are school-aged. Woodstock D200 taxes a levy of ~$9000 per student per year, rising with inflation. If 1000 units are built, and each contains on average .60 new student enrollment, then each new housing unit will create $5400 new cost burden to Woodstock NON-TIF-development taxpayers.
Woodstock officials claim that because one-bedroom apartments are not liable for developers’ impact fees, then they do not have children living in them.
Does that assertion sound like a Full-Blooded Legitimate Truth Family Member?
1000 new housing units creating no new school enrollment over the next 35 years?
In any case, the new 1000 TIF 2 housing units can be estimated to create a new public-school tax cost burden somewhere between zero and $5.4 million dollars per year for Woodstock taxpayers in Year 1, rising with inflation for 35 years. Whatever that number is: by law, TIF taxpayers are allowed to pay virtually none of it.
(Woodstock TIF boosters claim that “They are allowed to contribute to the costs of schooling TIF children”. This is another distant cousin bastard to the Truth Family. TIF Statute severely LIMITS the amount which TIFs may contribute to offset school tuition costs of new TIF development enrollment. TIF Statute provisions like this are designed to protect TIF bond investors. The estimate of TIF-legal-limited payments to schools is about 1/10 (one-tenth) of actual taxpayer costs.)
We must then also include the TIF free-riders’ social service provision costs as related to necessity of more police, fire& rescue, roads, MCCD, MCC, County government services, etcetera. This is roughly 1/3 of property tax bills, so we may assume that if we are being fairly billed at present, each TIF free-riders’ housing unit will cost another $2700 for these social service provisions in addition to schooling.
- TIF MONEY SOURCE 4: Sales tax. Quantify sales tax per new TIF housing unit created. (Average household income x percentage of income spent on sales-taxable expenditures x sales tax rate). (Hint: equals about $250 per hh MAX net sales tax per hh per year).
Then subtract sales tax lost per EXISTING residential units which will need to pay more property taxes to subsidize these new TIF free-riders. Household incomes can only spend a dollar on one thing or another. In Woodstock TIF case, the one thing for existing homeowners is required to be higher and higher property taxes….not the other. This amounts to spending millions to make thousands.
5. TIF MONEY SOURCE 5: Higher tax RATES. Tax RATES rise due to TIF. (RATE=levy/taxable EAV. Levy rises with inflation, TIF EAV is ‘Frozen’. Higher numerator over non-rising denominator=higher RATES).
Higher tax RATES give TIF windfall profits. Therefore, TIF causes its own profits to rise by creating a larger tax burden on all affected taxpayers. (Ironically, the taxpayers would be better off paying blackmail to TIF boosters to NOT inflict the TIF burden.)
Tax RATES must always rise in Woodstock TIF 2 unless conditions are exactly contrary to what Woodstock TIF 2 boosters must claim in order for their TIF, by law, to be allowed:BLIGHT HERE EXISTS; therefore, no development may occur without cash taxpayer-money free inducements.
Woodstock BLIGHT is in the form of 4%+ property tax rates, compared with buildable regions all over America having property tax rates which are tremendously, startlingly, hundreds-of-percent’s-lower while providing similar quality social service provision in return.
GIVEN the sources of TIF funding for the next 35 years of Woodstock surviving taxpayers’ futures, is the question: WHERE DOES TIF MONEY COME FROM? easier to answer? And is the answer comforting or frightening?