NWH Columnist More Than a Little Skeptical about Lakewood’s TIF District

Sunday Northwest Herald columnist Kevin Craver weighed in on the proposed Lakewood Tax Increment Financing District (due to be passed this Tuesday night at a 7 PM meeting being held at Turnberry Country Club).

Of interest to some will be that he is a Lakewood resident.

I think it would an accurate summary of his viewpoint that he does not think the SportsPlex, which is what stimulate the TIF proposal, will succeed.

“…don’t get me startred on the fairness of TIFs, which in theory only are supposed to be put in blighted areas.”

Cathy Tryon and Mike Skala watch Mike Tryon sink a putt at the Crystal Woods Golf Club.

Cathy Tryon and Mike Skala watch Mike Tryon sink a putt at the Crystal Woods Golf Club.

He, not to mention a lot of others, don’t see how the southern intersection of Routes 47 and 176 can be considered “blighted.”

This is the second time farmland has been TIFed.

The first was for the Huntley Outlet Mall.

However, it is the first time in McHenry County that golf courses have been considered “blighted.”

Craver suggests that a fund be set up to memorialize Lakewood Village officials who vote for the TIF.

Better educated in English literature than I (and that would not take much), Craver suggests an “Ozymandias” Fund be set up to build “10-foot-tall bronze statues” on Route 47, just in case the SportsPlex fails.

You can see what the Village Board intends to spend the $63 million on below:

Possible ways to spend the Lakewood TIF bond money.

Possible ways to spend the Lakewood TIF bond money.

Maybe the cost of such statues could be pried out of the line item of $2 million for “marketing.”

Craver’s column may be found here.


Comments

NWH Columnist More Than a Little Skeptical about Lakewood’s TIF District — 16 Comments

  1. Oh so he’s a NIMBY I say this after being called one in regards to the OWH power plant

  2. The only people who use the epithet “NIMBY” are people who haven’t yet had their turn facing someone who thinks his desire to make a profit trumps everybody else’s rights to property and a happy home.

  3. Tif will benefit Lakewood municipal managers who will control millions of dollars of cash flow for 35 years. These tif profits for Lakewood will come at the expense of School D200 taxpayers, and McHenry County taxpayers.
    Pejorative names will undoubtedly be invented to be applied to those protesting this inequity.
    Such names are attempts to lead conversation away from the facts of the issue.

  4. Isn’t the meeting in which the Board is voting to create the tif tomorrow (Tuesday 1/27)? The blog states Thursday.

  5. Refreshing comment by Kevin.

    Good to see he reads your blog.

  6. Another mistake that will be corrected.

    This refers to the previously incorrect date of Lakewood’s meeting to approve the TIF.

  7. Nice picture.

    What does it have to do with the article?

    Just to remind us that Spring is just around the corner?

  8. The picture above of the nicely groomed golf course qualifies for TIF status in the SB Friedman TIF Eligibility study as:

    “This report details the eligibility factors found within the Illinois Route 47 and Illinois Route 176 Redevelopment Project Area (the ‘IL-47 & IL-176 RPA’ or ‘RPA’) in support of its designation as a ‘blighted area’ for vacant land and as a ‘conservation area’ for improved land, within the definitions set forth in the Illinois Tax Increment Allocation Redevelopment Act, 65 ILCS 5/11-74.4-1 et seq., as amended (the ‘Act’).”

    So all land in the proposed TIF area according to SB Friedman’s interpretation of Illinois TIF laws is either:

    – Blighted (vacant) – 22 of 37 parcels – 331 acres – qualify for TIF status due to Lack of Growth in Equalized Assessed Value (“EAV”); and Obsolete Platting.

    – Conservation Area (improved) – 15 of 37 parcels – 278 acres – qualify for TIF status due to 24 of the 45 buildings are 35 years of age or older; In addition, our research indicates that the following four (4) factors for improved property are present to a major extent:

    – Lack of Growth in Equalized Assessed Value (“EAV”)

    – Inadequate Utilities

    – Lack of Community Planning

    – Presence of Structures below Minimum Code Standards

    The Crystal Woods and Craigs Woods golf courses, which make up 3 of the 37 parcels, are either blighted (vacant) or conservation area (improved).

    Since the golf courses have buildings, they are conservation area (improved)?

    More from the SB Friedman TIF Eligibility Study:

    “‘Blighted areas’ are those improved or vacant areas with blighting influences that are impacting the public safety, health, morals or welfare of the community, and are substantially impairing the growth of the tax base in the area.

    ‘Conservation areas’ are those improved areas that are deteriorating and declining and soon may become blighted if the deterioration is not abated.”

    Does it seem to you that the Craigs Woods and Crystal Woods Golf Courses “are deteriorating and declining and soon may become blighted if the deterioration is not abated.”

    Note according to the TIF Eligibility Study, the “blighted” classification can also be used for vacant land, but SB Friedman specifically states in the study the blighted classification is only being used for vacant land.

    Notice from the $66 Million projected TIF Expenditures by the Village of TIF Funds, the second largest cost $14 Million Dollars is for Property Assembly.

    Property Assembly is self-defined there as acquisition, site preparation, and environmental remediation.

    Where is the breakdown of the Property Assembly cost?

    Taxpayer dollars from all of McHenry County can be spend by teh Village of Lakewood for acquisition of property?

    And tax money from parcels throughout McHenry County will fund this TIF.

    That’s a well kept TIF secret.

    Property Tax Extension increases that would otherwise by funded by TIF parcels, are insead billed to parcels outside the TIF by jacking up the tax rate.

    How many parcels does the Village plan to acquire with TIF Funds?

    Where is the property that may be acquired?

    How may it be acquired, condemnation if the Village can’t agree on a price with the seller?

    What kind of site preparation?

    The Village will use your tax dollars to offset costs that would otherwise be paid by developers of say a Sportsplex, so either the Sportsplex or Crystal Woods Golf Course can make more profit?

    Has there been any environmental remediation identified or suspected?

    Where is such actual or suspected environmental remediation?

    Many more questions.

    There is no way the taxpayers have all the information they need on this proposed $66 Million Project.

    What’s Lakewood’s annual revenues?

    Let’s look at Village of Lakewood Revenue for year 2014 according to the Annual Financial Report on the village website.

    Description ———————————— 2014 ——— 2013
    Charges for Services ———————- $2,986,822 — $3,054,696
    Operating Grants and Contributions —— $0,039,216 — $0,038,732
    Capital Grants and Contributions ——– $0,007,499 — $0,001,532
    Property Taxes —————————- $1,796,208 — $1,771,074
    Other Taxes ——————————- $1,054,052 — $0,997,352
    Other ————————————– $0,018,096 — $0,017,637
    Interest ———————————- $0,011,864 — $0,016,283
    Gain/(Loss) on Sale of Capital Assets — $0,005,696 — $0,018,320
    Total Revenues —————————– $5,919,453 — $5,915,626

    Lakewood has $5.9 Million Annual Revenues.

    Revenues are close to expenses.

    http://www.village.lakewood.il.us/vertical/sites/%7B46B6A78E-D4CD-44FD-AD04-48899B9E3E7A%7D/uploads/AUDIT_REPORT_FINAL_2014.pdf

    Below is the path for the URL listed above.
    http://www.village.lakewood.il.us > Village Departments > Finance

    Say the TIF is 23 years (TIF vary in length and can be and are sometimes extended or sometimes ended early).

    The village has given the figure of $66 Million dollars as proposed costs for the TIF redevelopment project.

    $66,000,000 / 23 years TIF period (could be more if extended, could be less if retired early) = $2,869,565 per year.

    $2,869,565 average annual TIF expenditure by the Village of Lakewood, is roughly half the Village’s annual revenue for year 2014 of $5,919,453.

    Given that scenario, this TIF roughly increases the Villages annual revenues by 50%.

    Have you seen the special interests lined up to make a profit on this project?

    Even though the Sportsplex is a 501c3 non-profit.

    You can see the special interests on the color map in this blog (can’t find that map on the village website) of the proposed Sportsplex project which is the cornerstone of this TIF.

    Chicagoland Sportsplex – Preliminary Plan

    – Pepper Construction: General Contractor

    – Integrated Architecture: Principal architect of the Sportsplex primary indoor structure.

    – Jack Porter & Associates: Woodstock based real estate developer

    – LDI aka Land Design Inc: Landscape architecture and land design firm.

    http://www.mchenrycountyblog.com/wp-content/uploads/2015/01/Sports-Plex-map.png
    http://www.chicagolandsportsplex.com/about/development-partners

    Here is Jack Porter

    http://www.mchenrycountyblog.com/2010/07/28/lakewood-approves-mchenry-county-sportsplex
    http://www.mchenrycountyblog.com/2015/01/21/being-transparent-doesnt-molify-potential-lakewood-sportsplex-neighbors/comment-page-1/
    http://www.mchenrycountyblog.com/2010/07/30/lakewood-village-trustee-gives-view-of-sportsplex-meeting

    Also from the TIF Study:

    “To arrive at this designation, SB Friedman analyzed the presence of eligibility factors on a parcel-by-parcel basis.

    When appropriate, we calculated the presence of eligibility factors on infrastructure and ancillary properties associated with the structures.

    The eligibility factors were correlated to parcels using aerial maps, property files created from field observations, and record searches.

    This information was then graphically plotted on a tax parcel map of the IL-47 & IL-176 RPA to establish the distribution of eligibility factors, and to determine which factors were present to a major extent.”

    Why has the Village not made all that information available to the public for review?

  9. Gee, Cal, I think we all knew that.

    It was just really funny in that position.

    Now you’ve gone and edited it. [sigh]

  10. Hard to feel much empathy for a man who used his job to promote his belief that it was essential to use $600,000 in taxpayer dollars to hire 10 people for 5-1/2 months to promote Obamacare sales.

    Also no guarantees that premiums would be paid or policies would be retained; does it really matter if the waste is on ‘navigators’ or a potential site for a “sportsplex”?

  11. I see your point, Questioning.

    I really do. But, why sound the defeatist “What does it really matter”?

    Although there is no “healthcare”, and there is no “sportsplex”; one will take your property more surely than the other.

    One will have you lose your doctor and your job and make you poorer.

    The other will make you forfeit your property because of the situation from the first snowballing.

    One you could possibly have some control over how quickly they take you down.

    One you can stand and fight against locally.

  12. Really, using Chicago’s TIF use is merely a measure of how not use TIF districts…the Village of Lakewood has shown the ways the TIF district fits the area and how the funds can be used.

    TIF districts can work, especially in states like Illinois where state funding is laughable.

    The Illinois TIF Act generally authorizes that TIF funds may be used for:

    • The administration of a TIF redevelopment project.
    • Property acquisition.
    • Rehabilitation or renovation of existing public or private buildings.
    • Construction of public works or improvements.
    • Job training.
    • Relocation.
    • Financing costs, including interest assistance.
    • studies, surveys and plans.
    • Marketing sites within the TIF.
    • Professional services, such as architectural, engineering, legal and financial planning.
    • Demolition and site preparation.

  13. The Village of Lakewood has shown no concrete plans of zoning or cost projections, and their refusal to be transparent to the public indicated that they can be expected to misuse the funds just as well as any Chicago tif has done.

    The only thing we know for sure is that they will place all tif children into a school district to which they send no children and pay no money.

    We can quantify the expected cost of that to non-Lakewood taxpayers, the benefit of which will accrue solely to Lakewood.

    It’s a lot.

    It’s enough to fund infrastructure on that whole parcel.

  14. The Village of Lakewood has provided only a high level of overview of the proposed IL Route 47 & 173 TIF.

    If the Village wants to justify the TIF, the Village should provide detail level data on the TIF parcels such as EAV for each parcel for the past 23 years, Taxes paid by each parcel for the past 23 years, address of each PIN for each parcel, reason each parcel qualifies for TIF status, on a spreadsheet, so the taxpayer has all that information one place.

    That is not required by law but that is very helpful to the property taxpayers footing the bill.

    The Village of Lakewood website is lacking detail about the proposed TIF.

    The Village of Lakewood has not provided an object review of the pros and cons of the project.

    The Village of Lakewood has provided lots of pros, where are the cons?

    TIF funds can be used for a wide variety of purposes.

    Case in point, the 4 stone monuments in Crystal Lake that designate the beginning and end of the Route 14 TIF (one on each side of the street, check out the monument by Burker King next time you drive in the area).

    Where do the Stone Monuments fall in teh above category?

    Marketing?

    What is not laughable is a Village already lacking in transparency planning to spend $66 Million dollars of taxpayer money, which will come in part from taxpayers all over McHenry County.

    There is no chance EAV would actually be frozen in the TIF parcels if it was not for the TIF.

    All the TIF Eligibility Study was carve out TIF parcels so they met substandard Illinois TIF statutory rules.

    Here are two examples of Illinois TIF rules that need to be improved.

    The EAV qualification.

    The TIF qualifies under EAV rules not because EAV has grown less inside the TIF than outside the TIF.

    The opposite is true.

    EAV suffered less of a loss inside the TIF than outside the TIF, according to figures in the SB Friedman TIF Eligibility Study.

    That is, cumulative EAV for a period of 5 years (year 1 + year 2 + year 3 + year 4 + year 5).

    But the TIF Eligibility Study does not even mention this fact.

    Because the TIF Eligibility Study is just that.

    It’s goal is to qualify parcels of land for TIF status according to Illinois State Statute, not to provide an objective analysis to taxpayers.

    The Village Board should then take that study and present pros and cons to taxpayers.

    But the Village Board has not done that on its website.

    Here is the SB Friedman TIF Eligibility Study.

    Village of Lakewood, IL
    Tax Increment Financing (“TIF”) Eligibility Study and Redevelopment Plan and Project
    Illinois Route 47 & Illinois Route 176 Redevelopment Project Area
    Final Report: November 12, 2014

    The below definitions are used by SB Friedman and Illinois state statute to categorize land.

    Vacant Land aka Blighted Area
    Improved Land aka Conservation Area

    Note – RPA = Redevelopment Project Area (TIF area)

    First we will cover Vacant Land aka Blighted Area.

    Table 1. Percent Change in Annual EAV and Qualifying Periods for Vacant Parcels (Blighted Area)

    ————————- 2008-09 — 2009-10 — 2010-11 — 2011-12 —- 2012-13 — Total
    Vacant Parcels in RPA — 0.76% —– (1.37) —- (1.25%) — (17.89%) — (3.16%) — (22.91)
    Village Less RPA ——– 0.15% —– (8.44) —- (0.22%) — (16.71%) — (0.17%) — (25.39)

    Summary: For the Vacant Land aka Blighted Area category of TIF parcels, the EAV in the RPA/TIF declined less (22.91) than the EAV outside the RPA/TIF (25.29).

    That is the opposite of what should happen to qualify parcels of land for TIF status using the EAV criteria, because the whole idea of a TIF is that parcels in the TIF are more distressed than the rest of the community.

    Next let’s look at Improved Land aka Conservation Area.

    Table 2. Percent Change in Annual EAV and Qualifying Periods for Improved Parcels (Conservation Area)

    ——————– 2008-09 — 2009-10 — 2010-11 —- 2011-12 —- 2012-13 — Total
    Vacant RPA ——— 0.03% —– (0.45%) — (6.54%) —- (6.74%) —- (6.88%) — (20.58%)
    Village Less RPA — 0.15% —– (8.44%) — 0.22% —— (16.71%) — (0.17%) — (24.95%)

    Once again, EAV inside the TIF/RPA declinced less than EAV outside the TIF/RPA.

    It should be the opposite.

    To qualify under EAV eligibility rules, common sense dictates EAV in the TIF should be declining more than EAV outside the TIF.

    Restated, property values should be declining more in the area that is receiving taxpayer funding to improve its area.

    The Village does not have anything on its website pointing out this important fact.

    EAV is not declining more in the TIF area.

    EAV is declining more outside the TIF area.

    So how did the TIF parcels qualify for EAV status?

    The answer follows.

    First for the Vacant aka Blighted parcels.

    Lack of Growth in Equalized Assessed Value (“EAV”)

    The total EAV is a measure of the property value in the RPA. In order to qualify for this eligibility factor, the total EAV of the vacant parcels in the RPA, for at least three of the last five year-to-year periods prior to the year in which the RPA is designated, must have:

    1. Increased at an annual rate that is less than the growth rate for the balance of the municipality;

    2. Increased at an annual rate that is less than the Consumer Price Index (CPI) for All Urban Consumers; or

    3. Declined.

    The EAV history of all the vacant tax parcels in the RPA was tabulated for the last six years (five year-to-year periods) for which assessed values and EAV are available.

    The most recent year for which final information is available is 2013.

    A lack of growth in EAV has been found for the vacant land in the RPA in that the rate of growth in EAV of the vacant portion of the RPA has declined during four of the last five year-to-year periods.

    In addition, the growth rate in three of the past five year-to-year periods has been slower than the rate of growth for the balance of the Village.

    The basis for this finding is summarized in Table 1 below.
    Lack of growth in EAV within the RPA is one of the strongest indicators that the area as a whole has been falling into a state of decline.

    Next, for the Improved aka Conservation parcels.

    Lack of Growth in EAV – Improved Parcels

    The total EAV is a measure of the property value in the RPA. In order to qualify for this eligibility faactor, the total EAV of the vacant parcels in the RPA, for at least three of the last five year-to-year periods prior to the year in which the RPA is designated, must have:

    1. Increased at an annual rate that is less than the growth rate for the balance of the municipality;

    2. Increased at an annual rate that is less than the Consumer Price Index (CPI) for All Urban Consumers; or

    3. Declined.

    The EAV history of all the improved tax parcels in the RPA was tabulated for the last six years (five year-to-year periods) for which assessed values and EAV are available.

    The most recent year for which final information is available is 2013.

    A lack of growth in EAV has been found for the RPA in that the rate of growth in EAV has declined during four of the last five year-to-year periods.

    The basis for this finding is summarized in Table 2 below.

    In addition, the growth rate in three of the past five year-to-year periods has been slower than the rate of growth for the balance of the Village.

    Lack of growth in EAV is one of the strongest indicators that the area as a whole has been falling into a state of decline.

    The above charts are found on pages 15 & 22 (pdf pages 17 & 24) of the SB Friedman TIF Eligibility Study.

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