McHenry County Blog

Accompanying the following press release from School District 300 was this email message:

If you haven’t already done so, please read the following urgent news release issued by Community Unit School District 300 this evening about the new legislation filed today (House Amendment 3 to Senate Bill 397) on the Sears EDA extension: http://www.d300.org/news/29860.

District 300 taxpayers have been subsidizing the move of Sears headquarters from Sears Tower in the Loop to Hoffman Estates for almost 23 years.

It is possible that some D300 community members will be protesting at/near Sears headquarters tomorrow and Tuesday (especially around 8 a.m. and 5 p.m., as drivers are going to/from

To be very clear, they are NOT protesting Sears.

But through phone calls and visits, they will be asking Sears leaders to put pressure on state legislators to file another amendment this week so the legislation will truly focus on helping Sears not Hoffman Estates.

D300 leaders will continue to be very visible (wearing red) at the State Capitol all week until a vote is taken on this bill.

D300 opposes “money grab” for Hoffman Estates in new EDA legislation

SPRINGFIELD – Legislation filed shortly before today’s legal deadline (3 p.m. Sunday, Nov. 27) by Rep. John Bradley violates several key provisions of the tentative agreement that was reached last week to extend the Sears EDA.

These last-minute changes will perpetuate the unfair tax shift from the Village of Hoffman Estates onto D300 taxpayers for up to 15 more years.

Just last week, after tens of thousands of community members spent several weeks making calls, emails, petitions, protests, office visits, and official testimony to pressure state legislators to do the right thing, a fair and reasonable compromise seemed within reach.

D300 was finally invited to the negotiations table on November 16, and a compromise agreement appeared near completion.

Superintendent Michael Bregy said he was deeply saddened that changes to the tentative agreement have now forced the district to strongly oppose the new legislation.

He called the legislation a money grab for Hoffman Estates.

“The rug has once again been pulled out from under 21,000 students at the last minute,” Bregy said.

“We were so close to feeling that democracy still had a home in Illinois, and now we’re back to square one. The people’s voices are still being silenced.”

Today’s amended legislation, which also gives poorly funded incentives to CME Group, small businesses, and the working poor, is detailed here (House Amendment 3 of Senate Bill 397).

It has been assigned for consideration by the House Rules Committee.

Although no hearing date/time has been set for the Rules Committee, sources indicate the committee will consider the issue tomorrow (Monday, Nov. 28).

The General Assembly is expected to vote on the bill on Tuesday, November 29, during a special legislative session, although this vote may not occur until Wednesday.

D300 leaders are continuing to study today’s newly filed legislation. For now, here are the district’s six primary concerns:

1. During negotiations, it was verbally agreed that Hoffman Estates should not be allowed to use any EDA taxes to operate the village-owned Sears Centre Arena or make bond payments on the Sears Centre Arena. (The village owes more than $50 million in bonds on the arena, which it acquired in 2009.) But in today’s newly filed legislation, it is still not clear whether Hoffman Estates would be legally allowed to make bond payments using EDA taxes. The legislation must be clarified to specifically prohibit this. “How can any public servant allow school property taxes to be used to make payments on a facility that hosts half-naked women for lingerie football?” Bregy said. “If this legislation is passed, it will set a dangerous precedent for school districts all across the state who will be forced to subsidize entertainment facilities. If Rosemont can’t use taxes to make bond payments on the Allstate Arena, why should Hoffman Estates be able to pay off the Sears Centre Arena using taxes? ”

2. The Village of Hoffman Estates will continue to get an unfair amount of D300 school property taxes. Hoffman Estates would be guaranteed $5 million a year to administrate the EDA, which is $1.7 million more than normal taxation would give the village. Most of that extra $1.7 million comes directly from D300 school property taxes. In other words, Hoffman Estates will get 150% of the municipal taxes it would normally get in a standard tax distribution process, while D300 will only get roughly 30% of what it would normally get. “Sears and the General Assembly should require Hoffman Estates to compromise,” Bregy said, “and to stop using our school funding as an unending revenue source for the village’s operating budget.”

3. During negotiations, state legislators gave Hoffman Estates two options: either its annual payment would be a flat amount, or it would be subject to increases and decreases in the property value (EAV) of the EDA property. But in today’s newly filed legislation, Hoffman Estates would get both. The village would not only get a guaranteed $5 million a year from the EDA, but it will also get a cut of any increase in the property value over the next 15 years.

4. The Village of Hoffman Estates wants the district to promise not to sue the village over past, present or future uses of EDA funds, and it also wants an additional $350,000 from the EDA (above and beyond its $5 million administration fee) to cover its legal bills if any community members decide to file a taxpayers’ lawsuit. Village leaders are very nervous about their use of the EDA taxes, as they spent an hour during negotiations on Nov. 16 begging the district not to sue the village. Sadly, today’s newly filed legislation would give D300 school property taxes to Hoffman Estates to cover its legal expenses if a D300 parent or any other private citizen sued the village about the EDA. “How ironic is it that our students would have to pay to defend the village for taking money from our students?” Bregy said.

5. During negotiations, it was verbally agreed that Sears would only be able to be repaid for its past loans to build its facility and develop the EDA property, which it has testified is about $125 million. But in the newly filed legislation, Sears could make claims for any additional loans that it gets during the next three years. This is especially negative for D300 because the legislation was supposed to make the EDA automatically end when Sears was repaid, which would have been roughly 10 to 12 years if the repayment was capped to $125 million as discussed. If the EDA goes a full 15 years due to more loans for Sears, D300 will miss out on $30-$50 million that an early exit from the EDA would have given the school system.

6. During negotiations, it was verbally agreed that the amount of Sears’ loans would be certified by an independent auditor. But in the newly filed legislation, no one from the outside would be able to verify the amount. It would instead by verified by Sears executives.

A press release from School District 300:

New Sears EDA legislation lacks accountability, transparency, and efficiency

SPRINGFIELD – District 300 leaders discovered this afternoon (Monday, Nov. 7) while at the State Capitol that poorly written legislation had been hastily filed earlier today to extend the Sears Economic Development Area (EDA) for another 15 years without requiring

• accountability,
• transparency or
• efficiency.

House Majority Leader Barbara Flynn Currie filed Amendment 2 to Senate Bill 397 today.

This legislation is intended to provide incentives to Sears and the Chicago Mercantile Exchange (CME) to stay in Illinois.

However, a preliminary review by D300 officials today reveals massive waste in the distribution of tax dollars with no attempts to correct the current lack of oversight in the EDA.

“The bill filed today is horribly wasteful in reaching its goal of keeping Sears here, and it might as well be renamed the ‘Hoffman Estates EDA’ bill,” Superintendent Michael Bregy said.

“If the state wants to provide incentives specifically for Sears, that’s fine. But it’s definitely not fine to legalize the use of school property taxes to run an entertainment complex, such as the Sears Centre Arena. This legislation is an attempt to legalize something that is now considered a criminal act. If passed, it would set a horrible precedent for the fairness and transparency of the Illinois taxing system.”

The biggest winner in the bill is the Village of Hoffman Estates, for these and other reasons:

The legislation will allow the Village to use EDA funds (i.e. school property taxes) to buy and operate publicly owned buildings in the EDA, including the village-owned Sears Centre Arena, despite strong objections by over 11,000 petitioners and D300 leaders.

If this part of the legislation is truly about the village fire station within the EDA, as Hoffman Estates has publicly claimed, then legislators should specifically prohibit the use of EDA funds to buy/operate the financially struggling Sears Centre Arena. By using school property taxes to float the Sears Centre Arena, the Village would be protected from having to ask its own taxpayers for a tax increase.

The legislation will give the Village an estimated $93 million over 15 years, which is even more than the $5 million per year the Village now receives to “manage/administrate” the EDA.

A majority of this $93 million will come from D300 school property taxes.

Furthermore, this is $45 million above and beyond what the Village would have gotten if it had received 100% of the village property taxes paid by the businesses within the EDA.

If Sears moves away at any point in the 15-year plan, the legislation will allow Hoffman Estates to continue receiving $5 million a year from the EDA, above and beyond the Village’s normal tax revenues.

The legislation will not require any outside (State Comptroller) audits of the EDA, such as are required of Tax Increment Financing (TIF) districts.

There has never an audit specifically of the EDA since the EDA was established by the state in 1989. Hundreds of millions of EDA tax dollars have never been subjected to outside review, and this legislation would allow this lack of accountability to continue for another 15 years.

The legislation will not require any oversight by a Joint Review Board, such as is required of TIF district. A Joint Review Board is comprised of representatives from the affected taxing bodies.

Both in the current EDA and the newly filed legislation, the local taxing bodies have no voice and no seat at the table.

Superintendent Bregy said he was pleased to see that the legislation would penalize Sears if the company leaves Illinois before 2018.

“We support the portions of this new legislation that provide incentives directly to Sears and penalties if it moves its headquarters out of our school district,” Bregy said.

“That appears to be the one and only responsible portion of this otherwise appalling legislation.”

However, the district is concerned that the legislation does not specifically cap the amount of funds that Sears can take in from the EDA.

Sears had told lawmakers and D300 officials as recently as two weeks ago that its financial goal from the EDA legislation was to recoup $125 million in investments it had made in the EDA area.

D300′s cursory analysis of the newly filed bill is that Sears could receive up to $173 million.

D300 currently receives $2.9 million of the roughly $16 million in D300 school property taxes paid by the businesses within the EDA. At that rate, D300 would have received $43.5 million from 2013 to 2028.

The new legislation would give the district $89 million. However, we will lose $150 million in school property taxes – about half of which would appear to go directly to the Village of Hoffman Estates, and the other half to Sears, further illustrating the rampant waste in this legislation.

Under the new deal, Sears would receive both state tax credits and EDA funding as incentives to stay in Illinois.

Ironically, the CME portion of the deal doesn’t take Chicago Public School taxes to support the CME, while the Hoffman Estates/Sears portion relies heavily on D300 school property taxes.

Superintendent Bregy and other D300 community members are currently pushing legislators to rewrite the newly filed legislation.

Amendment 2 of Senate Bill 397 will be discussed by the House Revenue & Finance Committee on Tuesday morning. If the committee advances it to the full house on Tuesday , the Senate could take up the issue as early as Tuesday afternoon.

A final decision could come at any point this week.

The following are links to the legislation:

• http://www.ilga.gov/legislation/97/SB/09700SB0397ham002.htm
• http://www.ilga.gov/legislation/billstatus.asp?DocNum=0397&GAID=11&GA=97&DocTypeID=SB&LegID=55225&SessionID=84

This morning McHenry County Blog revealed the details of the Sears bailout bill.

Allison Strupeck, District 300′s Spokesperson, reacted with the following:

To be very clear, the new legislation that Senators Dan Kotowski (the chief sponsor of the original Senate Bill 540) and Althoff recently mentioned to the press and their colleagues has never been shared with us.

We are continuing to be shut out of the negotiations, as we have for the last several months.

These are the same kind of back-door, sweetheart deals that have characterized this legislation for the last nine months and have given Illinois a bad political name for years.

Unfortunately, we still have no idea if Kotowski’s new plan is indeed a fair compromise, and compromise is truly what is needed here.

After months of Superintendent Michael Bregy asking to be legitimately included in negotiations that will affect tens of thousands of students and taxpayers for the next 15 years, recently he was finally allowed to meet for the first time with bill sponsor Senator Kotowski and Sears executives.

Superintendent Bregy went into this last-minute meeting on the eve of the veto session hoping for good faith bargaining.

However, at the meeting he was repeatedly asked how much in SCHOOL property taxes we would be willing to give up.

D300 is still apparently the only party being asked to compromise in these so-called “negotiations.”

Since that meeting, there has literally been no follow-up by Kotowski with D300, and no drafts of the new legislation have been shared with us.

Our understanding is that the new legislation is being authored by the Hoffman Estates Village Manager, Mr. Jim Norris, in collaboration with Kotowksi (who is running for re-election and whose district includes the EDA) and State Representative Fred Crespo (a former Hoffman Estates Village Board Member).

It is certainly not coincidental that the backers of this legislation (many of whom have already gotten campaign donations from Sears) are waiting until the very last minute to file their new legislation before the veto session resumes on Tuesday, November 8.

They obviously want to give D300, the public, the press, and lawmakers as little time as possible to scrutinize the new legislation before they try to rush it through for a final vote.

This is absolutely unacceptable and borderline corrupt.

We have even heard that Kotowski may try to sneak this new legislation through as a trailer bill to prevent the House of Representatives from being able to weigh in on the new plan.

If it’s a good and fair plan, shouldn’t it be able to withstand public and press scrutiny?

The EDA generates $17 million a year in D300 SCHOOL property taxes, only $2.9 million of which ever makes it into schools.

We are subsidizing the education of Sears’ employees children.

So another $2.9 million a year in SCHOOL property taxes doesn’t even cover our costs and or help to bring our school system on par with the resources available to Hoffman Estates schools, which are not stripped of school property taxes from the EDA like D300 schools.

The original Senate Bill 540 Amendment 3 – as well as the new legislation that has been vaguely alluded to by Kotowski, Althoff, and others – are blatantly anti-education.

We understand that Hoffman Estates doesn’t give a flip about our 21,000 students.

But at the very least, Sears has an ethical obligation to ensure that as a corporation it does not short-change the educational opportunities of its employees’ children in our school system.

The key here is to provide financial incentives to Sears that don’t heavily rely on school property taxes.

There is a win-win to be had, if lawmakers and Sears choose to have it.

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Photos provided by District 300.

From Carpentersville District 300:

ECONOMIC DEVELOPMENT AREA (EDA) FACTS

Is Amendment 3 of Illinois Senate Bill 540 the right way – or even the best way – to keep Sears in Illinois?

Illinois leaders are expected to make their final decision during the upcoming veto session

(Oct. 25-27 and Nov. 8-10) on legislation that proponents claim is needed to keep 6,000+ Sears jobs in Illinois, but which would devastate the local school district for the next 15 years.

The following information is intended to clarify the issues from the perspective of

that school district, which serves 21,000 students.

The momentum and truth are on our side, but time is not.

More information is available at: http://bit.ly/NoWayEDA

MYTH #1:   Community Unit School District 300 (D300) is opposed to tax breaks for Sears.

FACT:  We are not opposed to the state providing financial incentives to Sears.  We fully understand that state leaders may want to offer an incentive package to Sears in order to stay competitive with offers from other states.  But we believe strongly that any such incentives should be the financial responsibility of the entire state, not only the D300 community.  Therefore, we are specifically opposed to the legislation that will be voted upon soon: Amendment 3 of State Senate Bill 540.  This particular piece of legislation uses D300 school property taxes as the #1 source of the Sears tax breaks.  Equally troubling is the fact that this legislation will further decrease transparency in the Village of Hoffman Estates’ management of the Economic Development Area (EDA) funds, and it will enable the Village of Hoffman Estates to determine how little school property taxes it gives to D300 and how much of our taxes it keeps for its own operating budget – which would may include the village-owned Sears Centre Arena as allowed in Amendment 3.

MYTH #2:  D300 is pushing Sears to move out of the state, which would ultimately hurt D300.

FACT:  We have consistently expressed our passion for keeping Sears here in Illinois.  Sears employees are our friends, neighbors, and the parents of hundreds (perhaps thousands) of our students.  We believe there can be a win-win for Sears, students, and taxpayers! This belief is shared by a growing number of state leaders and news media.  We continue to pursue collaboration in creating an alternative plan that helps Sears without relying on school property taxes.  However, many members of our community tell us that they want to protest against Sears, boycott Sears, and “shame” Sears.   Sears employees and their friends tell us that “Sears will probably move anyway.”  So time and time again, we continue to ask our community not to antagonize Sears, and instead to direct their frustration to its rightful source:  Amendment 3, which is being promoted by Village of Hoffman Estates as the EDA’s financial manager.   In our view, this is an EDA management issue far more than a Sears issue.

MYTH #3:  D300 has enjoyed all of the benefit of Sears moving into the area with none of the burden.

FACT:  With Sears came the children of the Sears employees.  Since Sears moved its headquarters into D300 boundaries over 20 years ago, D300 student enrollment has nearly doubled.  Hundreds (perhaps thousands) of Sears employees live in D300, and so D300 is responsible for the cost of educating their children.  The small fraction of the D300 school property taxes paid by the businesses within the EDA that actually makes it into the schools merely helps to offset the expenses of educating the students that Sears brought to our community.

MYTH #4:   D300 can’t “lose” what it doesn’t have. 

FACT:  The cost of operating our district will continue to grow, while the EDA would continue to shift the tax burden from Hoffman Estates residents onto D300 residents.  Think of our fight against Amendment 3 as the “anti-referendum.”  Our effort to block Amendment 3 is directly tied to our commitment to not seek another referendum for many, many more years by ensuring that school property taxes actually go to the schools.  For the past several years, our financial projections have shown that without the increase in funding when the EDA expired in 2013, D300 would enter a period of extreme deficit.  D300 is a growing district.  We are responsible for the costs associated with 300-400 additional students every year.  (This enrollment rate will further increase once the housing market rebounds.)  Our expenses also continue to rise for utilities, fuel, and insurance.  Moving forward, if we don’t ensure that the D300 school property taxes paid by the businesses within the EDA actually go to D300, we will need to look at cutting more educational programs, opportunities, and jobs.

MYTH #5:  If the EDA tax breaks weren’t put in place 20+ years ago, the area never would have been developed and D300 would not have gotten any increase in property tax revenue from the area.

FACT:  This statement by Hoffman Estates is intended to distract from the real issue at hand: Amendment 3.  We are not concerned about the past so much as the future.  Our complaint is not about the $200+ million in school property taxes that D300 contributed to the development of the Sears EDA property over the past 20 years.  Our complaint is regarding the proposed extension of these school property tax breaks in Amendment 3.   We believe 23 years has been long enough. The  EDA property has been developed and is no longer “blighted” or “economically deprived.”

MYTH #6:  An extension of the EDA tax breaks, as proposed in Amendment 3, is essential to keeping Sears in Illinois.

FACT:  No one has been able to clearly explain how Amendment 3 will keep Sears here.   But here’s what we do know about Amendment 3:

• It does not require Sears to keep ANY jobs in the EDA.  It only requires the EDA property, which includes many other businesses with thousands of their own employees, to keep a total of 4,000 jobs.  So Sears could move away and take all of its jobs without violating the terms of Amendment 3.
• It will enable the Village of Hoffman Estates to buy and run the Sears Centre Arena using school property taxes from the EDA.
• The tax breaks would be assigned to the property, not to Sears itself.  So they will make the Sears property more marketable for Sears to sell.

MYTH #7:  Passage of Amendment 3 would extend the current terms of the EDA funding distribution.

FACT:   The specific terms of the funding distribution would not be determined until after the Senate votes on Amendment 3 (if such a vote cannot be stopped).  But as the Chicago Tribune articulately stated in its October 19, 2011, opinion against Amendment 3, “That’s backward.  The details on revenue sharing should be settled first.” (Tribune editorial: http://www.d300.org/document/29255.)  Proponents of Amendment 3 have asked D300 to “trust” that the Village of Hoffman Estates will give D300 a larger portion of D300 school property taxes in the future than it did in the past, and that the Village will stop taking nearly $6 million for itself each year from the EDA money.  We believe that Hoffman could go the other way and give us less in school property taxes than the small amount they now choose to give us.  Furthermore, we are not inclined to trust Hoffman Estates, based on its past and present behaviors.

MYTH #8:  D300 will not get tax money from an empty building.

            FACT:  If Sears moves, Sears will still have to pay its property taxes on the building. 

MYTH #9:   The Village of Hoffman Estates has conducted audits of the EDA and has openly posted all of this financial information on its website.

FACT:  The Village of Hoffman Estates has only conducted a general audit of the Village.  No outside group has ever conducted an audit of the EDA in the past 20 years, to our knowledge.   There is supposed to be one Village of Hoffman Estates checking account, called a “Special Tax Allocation Fund,” into which all EDA revenues are deposited and out of which all EDA payments can be transparently tracked.  Unfortunately, the Village has numerous checking accounts that shift around the EDA money and prevent the public or press from being able to follow the money trail.  Furthermore, the Village has repeatedly stonewalled several D300 parents who filed requests a month ago (Sept. 16) under the Illinois Freedom of Information Act (FOIA) to access basic financial records, emails, meeting minutes and agendas, and other documents related to the EDA.  The Village told the parents that there are no records of any meeting in the past 10 years regarding a potential extension of the EDA.  Also, the Village has charged the parents more than $1,000 in copy fees, despite the parents asking to receive the documents via email.  (The law requires the documents be provided in the format that they were requested, such as via email instead of hard copies.)  The Village has told the parents that they won’t get to see the documents for at least 5 more days after the payment for copy fees.

MYTH #10:  D300 Superintendent Michael Bregy has refused to meet with Hoffman Estates Village Management.

FACT:  Superintendent Bregy has never received nor turned down any request to meet with Hoffman Estates managers.   He has, on the other hand, visited Hoffman Estates Village Board meetings on two occasions asking village managers to meet and work with him.  He was joined by several D300 students, parents, and teachers who pleaded with Hoffman Estates leaders to abandon Amendment 3 and redirect their energies into a win-win for Sears, students, and taxpayers.   Visit this link to watch an 8-minute YouTube video of one such Board meeting: http://www.youtube.com/watch?v=sog7ZTHqryw.

Since the EDA property is in D300 and does not include Hoffman Estates school districts 211 and 54, Hoffman Estates children do not have to sacrifice school property taxes like D300 children.

Each year, D300 has $5,100 less to spend on each high school student than Hoffman Estates high schools, and $2,500 less per elementary student.

D300 classes are some of the largest in the state, with 37 in elementary classes and 40+ in high school classes.

If Hoffman Estates students were impacted by the EDA like D300 students, the Village would not be pushing for an extension of the EDA that relies so heavily on school property taxes.

If the District 300 manage to win the fight not to be forced to subsidize Sears for another couple of decades, I’ll be really surprised.

Although one of the largest school districts in Illinois, the Carpentersville-based tax district is still a tiny part of the state.

Start with two premises:

• State leaders want to keep Sears in Illinois
• The State is broke

The solution 23 years ago was to bet on the come.

Give Sears and Hoffman Estates the tax revenue coming from moving Sears’ headquarters from Sears Tower to nearer the executives’ homes, plus on any real estate development on the property in question.

So, there was subsidized development, much like in a TIF (Tax Increment Financing) District.

This is a tried and true Sears strategy in the Fox River Valley.

I still remember the village board meeting when Sears’ development arm Homart was seeking to build Spring Hill Mall.

Everyone knew that four-lane highways would be needed around the regional shopping center.

But both Routes 31 and 72 were only two lanes.

It did not take any foresight to figure out that the mall would kill Downtown Elgin, that a four-lane highway connecting the shopping center to Elgin would be needed.

But, would Sears pay for it?

On, no.

Homart had the gall to ask and one of the villages the stupidity to agree to let sears have half of the sales tax receipts for ten years in order to allow Sears to pay for the extra lane on its side of Route 31.

One of the village trustees ran a drapery shop. As he was voting for this giveaway, I thought at the time he could see his cash register jingling from the drapes he was going to hang in the new stores.

Bet that didn’t happen.

But the ten-year sales tax subsidy did happen.

And state tax dollars paid for the extra lane needed across the street in front of the cemetery.

So, earnest people will travel from the area to Springfield on Monday.

And, sometime next week or the second week of November, legislation will be passed to subsidize the company with the professional and friendly and really nice lobbyists who send Sears checks to legislators near their birthdays.

And, more people who have not been really involved in Illinois government before, will become disenchanted, if not disgusted with the body politic.

= = = = =

I do have one lobbying suggestion:

Those who care intensely about the issue who have friends and family elsewhere in Illinois should call them and ask them to contact their legislators.  People calling state representatives and senators outside their district rarely can influence them.  A constituent calling may make a difference.

The beauty of this strategy is that one does not have to go Springfield.