At least that is my take on Woodstock’s Susan Handelsman’s reaction to the Wirepoints critique of Chicago Tax Increment Financing Districts published this week.

Susan Handelsman’s Take on Woodstock TIF District

Chicago political class is not alone in weaponizing TIF.

Suburban TIF districts have devalued properties outside the TIF umbrella, and raised property tax rates by significant amounts.(See academic studies by Dye and Merriman on deleterious effects of Illinois TIF).

Example: Woodstock IL. The latest residential TIF project turned a commercially zoned property into a multifamily residential zoned project, for which Woodstock gave developers over $1 million grants.

Assuming an assessment comparable to similar properties, and using standard formulas to present-value the assumed annuity-inperpetuity promised by this development to begin payments in 23 years (highly unlikely it will pay anything to taxing bodies until 35 years out)…

Woodstock taxpayers have already locked in a loss.

The present value of that property’s tax payments is smaller than the present value of $1 million of taxpayers’ dollars and asset value handed to development team by Woodstock City council today.

Put another way: Woodstock could pay down public debt with that money and save taxpayers far more than the present value of the promised TIF development property tax income which cannot begin to be collected until 23-35 years in the future.

Now that is not the worst new burden this project heaps upon to existing taxpayers.

35 new dwellings may add 21 new students (0.6 school-aged children per housing unit according to latest US Census) to Woodstock D200 schools.
TIF statute strictly forbids TIF funds be paid to schools above token amounts which do not begin to cover the true costs of providing mandated education.

In Woodstock IL, the actual property rate is 4% of fair market value (12% of EAV).

In D200, the property tax levy per student is now around $10,000 per year per student. (That is: school property tax levy divided by enrollment).

With 21 new TIF enrollment, taxpayers outside TIF zone will now be obligated to pay for the brand new expense of these 21 freeriders at over $200,000 per year, rising with inflation.

For at least 23 years, most likely 35 years.

As property tax rates are derived by the formula: levy/EAV, and TIF property development or inflation assessment increases are not included in taxable EAV for the 35 year legal lifetime of TIF, one can easily see how the property tax rate can only rise as a function of TIF.

Is any contributory (non-TIF) real estate development likely to occur in a 4%+ property tax rate region?

Because if none does, and existing properties’ values, even farmland, continue to depreciate as they have in past 15 years, Woodstock will see property tax rates like Harvey, and fairly soon.

There is a solution: make every property in Illinois TIF eligible, and rebate each property owner his TIF incremental payment pro rata.

This would solve many problems:

Corruption would disappear because the public could not be forced to front money for one politician’s buddy’s project.

Beggaring-thy-neighbor would disappear, in that poshy communities could no longer rely on subsidization from beleaguered taxpayers “outside” the poshy bubble.

Holding ALL Illinois properties at constant assessment values for 23 years would start to shift the property tax pain burden onto wealthy areas enjoying now TIF funding at others’expense (others whose propertyassessments rise with normal inflation).

And development would be motivated for proper economic reasons, not artificial profit opportunities only made possible by legal gizmos like TIF and crony socialism like TIF-runners practice today.