Why Woodstock Residents Should Oppose New TIF District

Susan Handelsman again urges Woodstock residents to contact members of their City Council asking them to reject the new Tax Increment Financing District:

2018 Woodstock TIF 2 Final City Council Action Coming Up

Woodstock TIFs are tax hikes.

Woodstock property tax rate is 4% of full fair market value.

That is more than triple the national average.

4% property tax rate with Chicago at 2.25% has about the same negative effect on our property values as if mortgage interest rates in Woodstock were 8% while mortgage rates are 6.25% in Chicago. FN1

Abnormally high property tax rates exert downward pressure on property values. FN2

Woodstock TIF will cause our rates to go higher. As inflation causes tax levies to rise over the next 35 years, the amount of taxable property responsible for the tax burden is limited by TIF law. The numerator gets bigger, but the denominator can’t get proportionally bigger to keep up.

Woodstock TIF 2 is a tax hike just as TIF 1 was a tax hike.

TIF 1 took in only $3 million from development-related property taxes, but spent $12 million. The other $9 million spent was a tax hike, because it came from normal property tax inflation over a 20-year period from existing properties within the TIF footprint.

Without the TIF, $9 million less would have been paid by taxpayers.

TIF 2 will begin Year one with our first tax hike; over $200,000 of inflationary property tax increment on existing properties, obviously nothing to do with new development.

Without this TIF, we all would have been able to pay $200,000 less in taxes next year.

As an additional tax hike, TIF 2 will increase Woodstock D200 costs by millions per year. Read the TIF Statute: TIFs are strictly limited by formula in what they are allowed to pay schools to cover the increased costs. FN3

Lakewood Village signed an agreement to pay D200 $9,000 per new TIF student per year, adjusted with inflation, for their TIF.

Assuming Woodstock TIF 2 creates 300 new TIF enrollment, there will be a tax hike of $2.7 million per year, rising with inflation.

35 or 23 years of supporting all the new TIF free riders’ mandated social service provision costs are in addition to the enormous debt liability of substantial school, local, and Conservation District debt coming due within this TIF’s lifetime.

This is particularly ironic because $150 million of D200 debt which these TIF residential developments’ owners are evading was incurred to build schools for new residential development: now the owners of these residential developments won’t pay for a dime of that cost.

Finally, unfunded pension liability is only the liability of taxable property, and taxable property in Woodstock is a bad bet with TIF 2 in place.

Conclusion: Taxpayers interested in self-defense options against this TIF should contact their Woodstock D200 school board representative, or feel free to contact me.

Susan Handelsman   815-540-7526   fourto5@aol.com

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FN1“This study suggests that focusing on education taxes and small homes provides a convincing approach for estimating the rate at which property taxes are capitalized into home values. As argued above, this rate seems to be close to 100%.”

SMALL HOMES, PUBLIC SCHOOLS, AND PROPERTY TAX CAPITALIZATION  Ryan M. Gallagher:  Department of Economics, Northeastern Illinois University,  Chicago, IL, USA  Haydar Kurban Department of Economics, Howard University,  Washington, DC, USA  Joseph J. Persky:  Department of Economics, University of Illinois  Chicago, Chicago, IL, USA CES 13-04  March, 2013 p12.

FN2“…TIF adoption causes depressed assessed value growth rates.””

there is a significantly negative impact of TIF adoption on growth in overall available (non-TIF) property values.”

there is a significant “cannibalization” of commercial EAV outside the TIF district from commercial development within the TIF district.”

Richard F. Dye and David F. Merriman. “The Effects of Tax Increment Financing on Economic Development,” Working Paper #75, James H. Kuklinski, editor. Lincoln Land Institute. September 1999, pp 24-26.  (Professors at UIC and Lake Forest College)

FN3 http://www.ilga.gov/legislation/ilcs/fulltext.asp?DocName=006500050K11-74.4-3

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