Lakewood Red(Ink)Tail Golf Club Alternative Revenue Bond Failure Featured in Chicago Tribune – Part 2
Part 2 of the Chicago Tribune said about Lakewood’s alternative revenue bond purchase of what is not called RedTail Golf Club:
Lakewood is featured as one of the villages
“where bets backfired on taxpayers…where taxpayers should have been protected form tax increases” but weren’t…where “taxpayers instead awoke to hikes they never approved, ones that even exceeded what the law normally allows.”
Lakewood did not make the front page of the story, but the financing of the golf course it bought is referenced on page 10.
“That’s how taxpayers is upscale Lakewood in McHenry County ended up paying for a golf course they were told wouldn’t cost a them a dime.”
Although I was not quoted in the story, I have replayed the interchange between the three residents and the then-village board several times to the current village board members.
There were three of us there.
Former Village Trustee Roger Reid said that he didn’t think it was the role of government to be in the golf club business.
Attorney Jim Bishop asked if board members knew that golf courses all over McHenry County were having financial problems.
I asked, “Is this ever going to cost me a dime?”
I was assured that it would not.
The breaching of that assurance undoubtedly explains my defense of the Property Tax Cap, which prohibited the issuance of bonds without a referendum. (I lost the fight to keep that prohibition for park districts and you can see the most recent “need” determined by the Crystal Lake Park District at West Beach.)
A sports management company made the projections that the golf course in Lakewood would pay for itself. The Tribune article explains,
“Some residents remained skeptical, including [former Village Trustee] Roger Reid, who recalls going with a small group to the Village Board meeting to ask for assurance that taxes would not go up because of the deal.
“‘We were assured–up and down and sideways–that, “This is not going to go on you tax bill,”‘ Reid recalled.
“Then residents were hit with the catch in the law: If projections are off, taxes can go up.
“Turns out, the town’s projections were so far off that the golf course couldn’t even pay a penny toward its loan payment for six years. And, by the time the bond was paid off two years ago, records show, 53 percent of it was paid off through higher taxes, not the projected golf course profit.”
The Tribune article points out that no state agency verifies financial projections that will be made by firms like Power Wellness, the health club firm McHenry County College hired to justify putting taxpayers on the hook for paying back tens of millions of dollars in projected borrowed money.
Although the Illinois Attorney General has authority to “advocate for taxpayers misled by the deals…the issue has never been raised there.”
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If you into irony, the day after the Tribune article about the abuses of alternative revenue bonds ran, the Northwest Herald ran diminishing the dangers involved in using alternative revenue bonds.