McHenry County Blog

New McHenry County Blog Masthead which contains a picture of the Norge Ski Jump in Fox River Grove, something unique to McHenry County.

It was October, 2005, when the Vulcan Lakes TIF proposal by the city council spurred me to start McHenry County Blog.

I knew–and knew that most others didn’t–that every dollar that gets poured into a Tax Increment Financing District’s project comes out of your and my pockets.

That’s because local tax districts are not at their maximum tax rates, as governed by state law.

The Property Tax Cap has forced those tax rates down while real estate values increased far faster than the increase in the cost of living.

This is parking attendant building for the Three Oaks Recreation Area. I invite you to compare it to the portable, wooden one used by the Crystal Lake Park District at the Main Beach Parking Lot.

So, if the value of your house went up 10% one year and the CPI increased 3%, the tax rate of each district had to be decreased to make sure its tax take would not exceed the CPI.

A bit complicated, but the result is that no tax district is at its maximum rate limit.

That means when assessed value is stolen from it by a city’s or village’s creation of a TIF district, the other tax district (read school district, park district, county government, you name it) can just increase the tax rate to get the same amount of money it would have otherwise received.

That’s why I called it a “TIF Tax Hike.”

So, with “free money,” you can expect that cities and villages won’t be too careful with it.

Take a look at the new fee collection gate being constructed at Vulcan Lakes…oops, Three Oaks Recreation Area, a place with precious few oaks, I would imagine.  (You can see other pictures here on the city’s web site.)

Compare that to the one used by the Crystal Lake Park District. It’s portable. Made of wood.

Works fine.

“TIFs re-direct taxes away from schools, parks and other local government agencies bankrolled by property taxes. Property taxes within a TIF district are frozen at existing levels for 23 years.”

That’s what the Chicago Sun-Times wrote yesterday in an article entitled,

The Vulcan Lakes TIF is larger, as I revealed in one of my first articles on Dec. 1, 2005. I titled it,

Just putting things in perspective.

From the beginning of McHenry County Blog, which was started with the proposal to put Vulcan Lakes into a Tax Increment Financing district, I’ve watched other towns give TIF money away to developers.

Of course, I know, even if municipal officials deny it, that every dime spent by a tax district comes out of the pockets of taxpayers whose property is within one of the schools or other tax districts where the TIF is located.

It sort of a local stimulus package for developers to be paid off by local taxpayers over a 23-year period.

Now comes Wheeling developer Mark Smith, building Prairie Part at Wheeling, a condo project, asking the village board, pretty please, may I have more than the $4.5 million you have already promised me?

That and more is contained in an article by Graydon Megan in Wednesday’s Chicago Tribune.

Times are so tough, you see.

There are 80 unsold units priced from $300-$500,000+.

$3 million more would be very helpful.

Wheeling’s consultant S.B. Friedman and Co. advised not to pass on any more money, because “it would go to the bank over the next 24 months and not fund any new construction.”

Stay tuned.

When legislators run for re-election, opponents search the record for votes they consider “bad.”

As far as I can figure out, none of the five challengers to the Crystal Lake City Council incumbents has cited any votes of the incumbent councilmen running for re-election. You see, from left to right, Councilman Ralph Dawson, Councilman Dave Goss and Councilman Jeff Thorsen.

When I wrote the Crystal Lake part of my Algonquin Township, Precinct 7 letter, I decided to include votes from the three issues I think were most significant in the last two years.

Below is what I wrote and distributed to the homes in my precinct on Saturday. About 125 are in Crystal Lake; the other 100 in Lakewood.

Let’s talk about the incumbent CL councilmen first. In the last two years, three issues have attracted the most attention—the 23-year Tax Increment Financing tax hikes, Mayor Shepley’s 75% city sales tax hike and building a baseball stadium on the lake’s watershed.

Here’s what the incumbents and a challenger who had a vote did:

Vulcan Lakes and Main Street TIF Districts, passage of which will cause every tax district to raise our tax rates to make up for the lost revenue taken for city-directed purposes:

Voting Yes – Ralph Dawson, Dave Goss and Jeff Thorsen

Hiking the city sales tax by 75%:

Voting Yes – Ralph Dawson and Dave Goss;

Voting No – Jeff Thorsen

Approving the poorly thought out McHenry County College minor league baseball stadium:

Voting Yes – Dave Goss;

Voting No – Ralph Dawson, Jeff Thorsen and Carolyn Schofield (on the CL Planning and Zoning Commission)

I then wrote some things about the challengers and made no recommendations.

I just tried to provide enough information for voters to make up their own minds.

McHenry County Blog received the following from Crystal Lake City Councilman Jeff Thorsen, who is running for reelection. He, like others, have had trouble posting comments for well over a year…ever since Google “improved” the Blogger host that I use.

Below I have turned his comment into an article. Other council candidates who wish to comment are welcome to do so. Just email what you want people to read to the email address way, way down on the right hand side of the page.

I can’t post a public comment on your site for some reason.

Anyway, the real news about the (Crystal Lake city) budget occurred last year when the Home Rule Sales Tax was passed.

Mr (Mike) Shorten’s concerns would be valid if by approving this budget we were committed to the 31 million he is referring to.

I can tell you that what is in the budget is not yet approved.

Once it is approved, the items are budgeted pending approval of each individual item as they come before the council in there own due time. T

The budget process is a 0 sum game.

The expectation of revenue (real) has to bury itself in the phantom expenditures allocated in the budget.

Remember I did not approve the 2008- 2009 budget. I voted no.

I did not approve the H(ome) R(ule) sales tax. I voted no. (Two articles are relevant:

• Mayor Aaron Shepley’s reasons for voting “Yes;”
• City Council member’s reasons for voting “Yes.”)

I have not had the opportunity to vote on this budget.

I can tell you that there was a budget workshop open to, and published to, the public and many attended. Carolyn Schofield was there. You may want to ask her if she felt there were some kind of shenanigans going on there.

Take any budget and compare it to its corresponding year’s audit….what do you find?

We are usually pretty close on the estimate of revenue and have not done many of the projects whose cost helps us achieve a balanced budget as predicted at the beginning of the fiscal year.

This has traditionally left us in the black and the excess revenue flows directly to the general fund.

(How much revenue does a tax district need in reserve? An answer in this article.)

The trick then is that the same project is returned to a future budget and expected to be funded through that budget….i.e. not allocation carry over.

The rest of the ranting I hear regarding this issue seems to spew from Chicken Little.

If we are going to the public on these issues we owe them the facts and not any fiction!

Bottom line is that the Capital expenditures budget appears to be relying on the TIF’s for their respective bonding repayment sources. NOT the H(ome) R(ule) sales tax.

Believe me when I tell you I am not defending the H(ome) R(ule) sales tax, here. I do not see a corresponding allocation in the H(ome) R(ule) sales tax fund. What I do see are the expenditures that may occur this year that will be repaid to the general fund by the bonding of the TIF’s when and if they can produce enough increment to bond.

The fact that the budget has a special section regarding the H(ome)R(ule) sales tax is both helpful and somewhat misleading. It is helpful to know the extraordinary expenditures for the coming fiscal year are covered by the H(ome) R(ule) tax.

But the reality is the H(ome) R(ule) sales tax fund is an unrestricted component of the general fund.

The money spent or expected to be spent on any TIF will be repaid if and when we go to bond on each project.

Because of the current economy, now is a great time to bond because money is cheap. We have to be able to take advantage of that should the conditions dictate.

I do not see it as a mandate to spend 31 million.

I believe Mr. Shorten’s position on this is similar to crying “Fire” in a crowded theater. I would love the opportunity to debate him publicly on this matter, or to talk to him privately if he so chooses.

You know what I am telling you is honest, Cal. You have been in these trenches.

Jeff Thorsen

I got a fact-filled email from Crystal Lake City Council candidate Mike Shorten yesterday.

He talks about the “doubling the city’s debt load” in the proposed budget.

And, he is the first candidate I have heard mention this:

“If I am elected, I will support regression or removal of the Home Rule Sales Tax, provided that we continue on an adequate pace to continue to cover the costs of our core obligations.”

Since I have not seen Shorten’s information elsewhere, I share it with you below:

“I wanted to add to my point last night (at the McHenry County League of Women Voters city council candidates’ night) about the about the capital construction projects and the bonds that are included in Crystal Lakes 2009-2010 budget.

“In fact the budget proposes issuing $31 million in bonds to be repaid from the proceeds of the .75% Home Rule Sales Tax that was approved last year. The $31 million in bonds is proposed to fund the following four projects:

• Vulcan Lakes- $16 million
• Virginia Street Corridor- $4 million
• Union Pacific Railroad relocation- $ 8 million
• Senior Center- $3 million

“You will note that of the 4 projects listed above, 3 reside within TIF districts.

“The question begs, why aren’t the bonds being issued against future TIF income?

“I pulled out my copies of all three TIF Plans that I pulled off of the city’s website and re-read each of them and there two concepts spelled out in all of the documents that are striking to me; TIF funds are suppose to pay for the projects, but ultimately “Funds necessary to pay for redevelopment project costs may be derived from a number of authorized sources” including municipal sales taxes.

“Additionally the TIF programs spell out that the “Redevelopment Land Use Plan shall serve as a guideline for the Project Area” and “should not be rigidly interpreted”.

“I will grant that the amounts budgeted above are only a portion of the revenues that the TIF districts are projected to generate during their lifetimes, and that ultimately there will be additional opportunities for the city to bond against the TIF to pay for other redevelopment costs, however at the surface it appears to me that the TIF is an easy way for a municipality or other government body to say that they have a plan, a way to pay for it and are moving forward.

“I think that doubling the city’s debt load in one year against the Home Rule Tax, when 90% of that debt could be borrowed against future TIF revenue is irresponsible.

“While I agree that the Home Rule Tax passed and implemented last year by itself has minimal effect on the average shoppers pocketbook, what is rarely acknowledged (at any level of government) is that one entity’s tax may be insubstantial, the combined effect of all of our taxing bodies increasing their impact upon our pocketbooks is becoming crushing.

“I believe it is intellectually dishonest for city leadership to say that theses TIF projects are paid for without additional taxes, when in fact they are not.

“I could stand behind the Home Rule Tax if it was necessary to fund the core obligations of the city, but it is not.

“If I am elected, I will support regression or removal of the Home Rule Sales Tax, provided that we continue on an adequate pace to continue to cover the costs of our core obligations.

“In addition as a funding source for the TIF area bonds for years to come, the city has also proposed that the Home Rule Sales Tax Fund will pay for the following in 2009-2010:

• Economic development- $275,000
• Flooding Control- $352,000
• Road Resurfacing- $53,000
• Vulcan Lakes Construction- $1.2 million
• Vulcan Lakes Operations- $158,000
• Senior Center- $240,000
• Virginia St. Corridor- $269,000

“It’s worth noting that the public hearing on the budget won’t take place until the next council meeting, April 7th.

“Which is election day.

“After the polls have closed.”

= = = = =
Crystal Lake City Council candidate Mike Shorten can be seen at the microphone and standing with fellow candidate Kay Stanish before Thursday night’s Candidates’ Forum.

This sign advertised that Main Street Station was going to develop condos and lofts where Hines (Rosenthal) Lumber used to be.

The sign is gone.

It appears the Hummel Group, which proposed to develop a five-story condo and commercial building is gone, too.

In its Monday editorial, the Chicago Sun-Times took on Tax Increment Financing districts.

The commentary was so similar to my own. I’ll share some with you.

You may remember it was Mayor Aaron Shepley and his city council’s proposal to turn Vulcan Lakes and the Route 14 business strip into a TIF district that led to my starting McHenry County Blog.

Here’s my second article about the interrogation of the Crystal Lake TIF consultant by the Crystal Lake Park Board.

So, what did the editorial say?

“As you might suspect, the mayor thinks the TIF program is wonderful. He insists TIFs don’t result in higher property taxes for homeowners, although, of course, they do.”

Now, remember, the Sun-Times is talking about Chicago Mayor Richard Daley, but it could be writing about Crystal Lake’s mayor.

After a flyer encouraging people to attend the city council hearing on the TIF districts was distributed by Jim Young, Mayor Shepley was adamant that the TIFs would not cause a tax increase. See

The Sun-Times asks where folks think schools and other tax districts will get more money if they can’t get it from rising assessments.

“They raise their tax rates, and they get it, in part, from you,
dear homeowner.

“As you might also expect, if you’d like to learn more about the nitty gritty of how TIF money is spent, and what kind of protections are in place to ensure taxpayers get a good return on their hard-earned property tax dollars—well, those details are not particularly easy to come by.”

The details of the just concluded Downtown TIF are not on the newly revised city web site, for instance.

In its Monday editorial, the Chicago Sun-Times took on Tax Increment Financing districts.

The commentary was so similar to my own. I’ll share some with you.

You may remember it was Mayor Aaron Shepley and his city council’s proposal to turn Vulcan Lakes and the Route 14 business strip into a TIF district that led to my starting McHenry County Blog.

Here’s my second article about the interrogation of the Crystal Lake TIF consultant by the Crystal Lake Park Board.

So, what did the editorial say?

“As you might suspect, the mayor thinks the TIF program is wonderful. He insists TIFs don’t result in higher property taxes for homeowners, although, of course, they do.”

Now, remember, the Sun-Times is talking about Chicago Mayor Richard Daley, but it could be writing about Crystal Lake’s mayor.

After a flyer encouraging people to attend the city council hearing on the TIF districts was distributed by Jim Young, Mayor Shepley was adamant that the TIFs would not cause a tax increase. See

The Sun-Times asks where folks think schools and other tax districts will get more money if they can’t get it from rising assessments.

“They raise their tax rates, and they get it, in part, from you,
dear homeowner.

“As you might also expect, if you’d like to learn more about the nitty gritty of how TIF money is spent, and what kind of protections are in place to ensure taxpayers get a good return on their hard-earned property tax dollars—well, those details are not particularly easy to come by.”

The details of the just concluded Downtown TIF are not on the newly revised city web site, for instance.

It looks like one of those old time gas street lights, doesn’t it?

But it’s not.

It’s styled to look that wa, but it was just installed in front of the Crystal Lake Park District administrative building on East Crystal Lake Avenue with your Tax Increment Financing dollars.

I won’t go off on a rant about how TIFs increase all of our taxes in McHenry County when any municipality imposes one.

Today.

Let’s just enjoy what this beautification project looks like when the afternoon late winter sun was hitting just right.

I thought the city was going to bury all of the wires, but there still seem to be some in the background.