Cost of Lakewood TIF District, Including Interest

Don’t know why I didn’t think to figure out how much the Lakewood TIF project will cost before, but I didn’t until bond analyst Steve Willson ran the numbers.

Most have been thinking that the figures provided in the SB Friedman feasibility report sum up the total cost.

That’s $66 million.

Possible ways to spend the Lakewood TIF bond money.

Possible ways to spend the Lakewood TIF bond money.

But just looking at how the bond money could be spent does not factor in the interest that will have to be paid to borrow the money.

That probably doubles the cost.

Estimated interest to be paid by Lakewood to borrow $66 million.

Estimated interest to be paid by Lakewood to borrow $66 million.

So we are looking at property taxes amounting to about $132 million that will be diverted from

  • McHenry County Community College
  • Crystal Lake Park District
  • Dorr Township
  • Dorr Township Road & Bridge
  • Grafton Township
  • Grafton Township Road & Bridge
  • Huntley Area Library District
  • McHenry County
  • McHenry County Conservation District
  • Rural Woodstock Library District
  • School District 47
  • School District 155
  • School District 158
  • School District 200

Instead the $132 million in real estate taxes will go to benefit the Village of Lakewood.

The meeting at which the Lakewood Village Board is expected to approve the Tax Increment Financing District will be held at the Turnberry Country Club at 7 PM.


Comments

Cost of Lakewood TIF District, Including Interest — 6 Comments

  1. The development which would pay huge money in return for special use permit on this property is a power plant.

    We will now have to (frequently) periodically check if an application for feasibility study for a power generation facility in this location has been placed in the PJM queue.

    Here’s how:

    1. http://www.pjm.com/planning/generation-interconnection/generation-queue-active.aspx

    2. “Fuel Type” select ALL, “Status” select ALL, “State” select Illinois, then (IMPORTANT!) select the ALL tab after the alphabet, next to AA2.

    3. Scan the list of Pjm Substation names. It might show up as Pleasant Valley, or something else.
    You can also look on the Map link which has colored dots where planned or operational facilities are located.

  2. Re: “Instead the $132 million in real estate taxes will go to benefit the Village of Lakewood.” This statement could make one believe that there is a ‘benefit’.

    What is the benefit of bloated government?

    I believe a more accurate statement would be:

    The $132 million in projected real estate tax will result in double or even triple taxation elsewhere in the County.

    Increased development from the proposed TIF will not result in high paying jobs as the TIF in Hoffman Estates did.

    Ask the residents of D-300 school district how even that TIF worked out for them.

  3. As posted on the item relative to Kevin Craver: 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”?

  4. I repeat what I said earlier:

    Five years ago, the SportsPlex team proposed a $40 million project and couldn’t find investors even with a deep Federal subsidy.

    Now they’ve come back as a not-for-profit corporation, meaning they have no equity whatsoever and they want the Village to issue $66 million in TIF bonds.

    With three years of capitalized interest, the annual payment to amortize the debt in the remaining 20 years is $5.8 million.

    The property tax rate around here is about 3.4% of market value.

    Divide $5.8 million by 3.4%, and you figure out that this project will need an INCREASE in assessed value of $171 million to barely cover debt service on $66 million in bonds.

    How did a $40 million project that no one would touch back when it had equity suddenly become a sure-to-succeed $170 million project now that there is zero equity?

  5. The projected EAV in the TIF by SB Friedman is $34 Million after 23 years, up from the 2013 EAV of $1,796,649.

    I haven’t seen anyone track on an Excel Spreadsheet the EAV increase of the overall TIF or of each parcel in the TIF.

    TIFs in a nutshell are a relatively easy way for municipalities to get a little money from a lot of people with little oversite on the spending, since the TIF recordkeeping is separate from the rest of the village, and since most villages don’t have a watchdog, chances are the TIF won’t have a watchdog.

    And the flow of money is not understood, the best explanation I’ve seen is the video “Understanding TIFs” on the Cook County Clerk website, as previously posted.
    http://www.cookcountyclerk.com/tsd/tifs/Pages/default.aspx

    Has the village said they plan to issue $66 million in TIF bonds at the outset of the TIF?

    Certainly that is one option as they said the project is estimated at $66 Million.

    And that just gets back to the lack of transparency by the village, they hopefully have more line item detail on how they would spend the $66M, but that has not been posted on the village website.

    And remember municipalities often structure bond debt repayment in an escalating fashion, lower payments upfront, steadily increasing over the years, highest payments at the end of the 23 years.

    One reason for that is for example with the TIF, it will take awhile for the project to be constructed which would result in EAV growth which would result in more taxpayer revenue to the TIF.

    So the TIF doesn’t typically generate a steady increase in payments, it may generate little increased taxes upfront, may have some spikes as new projects are completed and EAV hiked, maybe have some lulls if the Sportsplex doesn’t take off as planned or if there is a recession, etc., there are risks.

    Then when the bond payments from Taxing District to bond holders escalates too, it’s not uncommon for the Taxing District to refund / refinance the debt, creating a perpetual cycle of debt.

    So this could be the start of a perpetual cycle of debt by Lakewood.

    The taxpayer would want to see something like what Steve has above on a spreadsheet.

    Which brings up a few more points.

    It’s not uncommon for a village to issue a premium on the bond to get cash upfront for whatever purpose, such as to pay costs of issuing the bond, or use the money due to a shortfall of revenue or an increase in expenses.

  6. Remember EAV (Equalized Assessed Value) is approximately 1/3 of Market Value.

    So if the EAV of your house is $100,000, your house is worth about $300,000.

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