An email to the Lakewood Village Trustees from Lakewood resident and bond analyst Steve Willson, a copy of which landed in my inbox:
To the Lakewood Board of Trustees:
When the subject of a TIF district became lively, I did what I always do in these situations: I researched it. I looked for facts before reaching a conclusion.
I found one key point: The Village is required to find that, “but for the designation of the TIF district and the use of Tax Increment Financing, it is unlikely that significant investment will occur” in the designated area. This is commonly known as the “but for” requirement.
I wondered what evidence there was that TIF districts actually produce economic benefit for the community as a whole, as opposed to the tax increment itself, that is, that they actually meet the “but for” test. So I reviewed the literature.
I found three academic studies showing conclusively that in most cases TIF districts produced no broad economic benefit. That is, most TIFs actually fail the “but for” test.
I found no studies showing TIFs actually work.
I found several self-serving studies by TIF organizations showing anecdotally that some TIF districts produce TIF revenue, but none showing that such a benefit would not have occurred eventually anyway. This, of course, is the essence of the “but for” test.
So, the general evidence being against it, the Village faced a high barrier in having to meet the “but for” test for its particular TIF.
How did they do so?
The Village hired a consultant who was paid to give exactly that opinion, just like MCC [McHenry County College] hired a consultant to “prove” they needed a big addition, an abuse so egregious the legislature changed the law with regard the use of consultants to justify issuing Alternate Revenue bonds.
Your consultant’s opinion hardly constitutes an independent finding, and your consultant provides zero evidence to support his opinion.
I ask the following questions, to which I would like real answers. Consider this a FOIA request. These are the types of questions members of the board should have asked before accepting the consultant’s opinion.
- How many TIF projects has your consultant reviewed?
- In what percentage of TIF projects he reviewed did he find the “but for” test was not met? (A low or zero percent answer would provide strong evidence he was as independent as MCC’s consultant or the typical real estate appraiser who depends on Realtors for referrals.
- Has the consultant ever reviewed the projects on which he has opined to determine, after the fact, if indeed there was significant additional development near the TIF districts he approved that was attributable directly to the TIF itself? (If not, then he really has no track record, no proof his opinion is valid.)
In short, absent stronger evidence than a mere bought and paid for opinion, the evidence of the independent economic analyses must stand that TIFs have a very bad track record and no evidence has been provided to overturn that general presumption in this particular case.
This is not just “a matter of opinion” on which reasonable people can disagree.
This is an issue that can be answered by well-defined tests of evidence.
Failing to seek such answers is not to exercise fiduciary responsibility.
And so far the evidence is against the Village.
Please answer my questions and, if the answers show the consultant is indeed biased and has no evidence of effectiveness, admit you do not actually meet the “but for” test in substance, even if you can find a lawyer who will opine that, technically, you have met the legal requirements.
Public policy should be based on facts, not loopholes
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A meeting will be held to consider zoning the SportsPlex and approving the TIF District at 7 PM next Tuesday, January 27th, at the Turnberry Country Club.