Prior to the December 18th Joint Review Board hearing for the huge new Tax Increment Financing District proposed by the Woodstock City Council, School District 200 Board President Carl Gilmore wrote the following call for opposition, which was published in the Northwest Herald.
It is printed here with permission of its author.
Proposal fails objective of TIF Act
For 21 years, Woodstock’s taxing bodies have operated under the weight of the downtown tax increment finance (TIF) district.
Now, city fathers are proposing a new, overarching TIF district (TIF 2) that overlaps and substantially increases the area currently under TIF authority.
By the time TIF 2 expires, Woodstock will have labored under TIFs for nearly 50 years – half a century of tax breaks for developers at the expense of taxpayers.
On December 5, a Joint Review Board including officials from Woodstock, McHenry County and Dorr Township passed a resolution declaring TIF 2 meets statutory requirements and the objectives of the Tax Increment Allocation Redevelopment Act.
Woodstock Community Unit District 200, along with McHenry County College, voted “no.”
TIF works by speculating that costs of development now will be paid off when the value of real estate within the TIF rises as a result of development and improvement.
Once the real estate value rises, property taxes increase.
This increase between the pre-TIF and post-TIF property taxes is the tax increment.
The tax increment is in return used to repay expenses incurred during development.
Left unpaid are the increased costs associated by other taxing bodies within the TIF district: increased
- city services and
- other costs
These are borne by the tax base level at the time the TIF district was created, as if there had been no
development at all.
The TIF Act does not call for nor allow a straight vote on advisability of TIF 2 by impacted tax authorities.
D200 voted against because TIF 2 fails on both prongs of the vote, but TIF 2 fails the objectives of the Act.
TIFs were designed to allow communities to provide a shot in the arm of dilapidated areas.
In concept, upon exit from the TIF the lost tax increment will be recovered by spreading higher tax value among more taxpayers.
In other words, spreading tax burdens of
- running schools
- providing fire and police protection, and
- beautifying the TIF
among more people reduces tax burdens for all of us.
But for this to happen, the TIF needs to end.
By extending and expanding tax relief from the current TIF into TIF 2, the city effectively provides generational tax relief for developers to be subsidized by residents.
There is no recovery period.
The city makes no secret of its plans to include 500 residences within TIF 2.
For D200, these units represent a sizable new student population that will be supported by current taxpayers.
It is possible each student within TIF 2 could enter, attend and graduate from D200, with the costs covered by you.
If TIF 2 is passed in its current form and if the city’s projections are met, the district faces increases in costs such as
- teaching staff
- support staff and
- operational costs like busing,
to name a few.
Ultimately, the district may face the difficult decisions of increasing class sizes, reducing costs through curriculum modification, or other means.
The board worked hard over the past several years to keep tax levies level and reduce tax rates while maintaining programs.
Whether D200 can continue to maintain school quality under TIF is speculative, but it is quite possible TIF 2 will add insult of reduced school quality to the injury of climbing taxation.
In the eight years I have been on the D200 board, it has regularly agreed to city requests for development concessions, including housing developments, aimed at spreading the tax base and reducing tax burdens.
D200 can absorb and is willing to absorb some students.
D200 has shown willingness to go along with reasonable incentive programs.
There are alternatives to TIF 2 as proposed.
However TIF 2, combined with the current TIF, is not an economic incentive, it is tax reallocation.
And tax reallocation is not the objective of the TIF Act.
The city council will not formally approve TIF 2 until January 15, 2019.