Serwatka Responds to Board “Everything’s Fine” Comments

An email from newly-elected Lakewood Village Trustee Paul Serwatka:

Serwatka email palm card

The Northwest Herald released an article yesterday, giving a glimpse of the battle that lies ahead.

Residents have responded, describing some board members’ responses as “obtuse,” “pig-headed” and “narcissistic”…

One thing is certain, we have a board of trustees, who seem to have forgotten their place!

As I stated, but wasn’t printed in this interview, my first objective will be to teach and/or remind board members the essential elements of a trust and the legitimate role of the trustee – which is to manage assets (government and revenues) with loyalty to, and for the benefit of, the beneficiary – THE RESIDENTS!

As typically happens in government, our current board seems to have lost sight of this (or perhaps they never truly understood it) and have adopted the philosophy that their role is to serve and expand government, at the expense of, and to the detriment of, the residents. THIS, FIRST AND FOREMOST, MUST CHANGE!

The role of the residents, in this endeavor, will be paramount. There will be times where a call-to-action will be needed. We CAN turn this around… but, as cliché as this sounds… it truly takes a village…

Below is the article:

Write-in candidate’s win doesn’t change thinking on Lakewood board

The subheadline reads,

Lakewood trustees confident in how they’ve been voting

The headline on the jump page reads:

Smith: Village needs to do
better job communicating

Trustee Ken Santowski says he sees no reason to change the way he has been voting, but the article does not point out that he was the only one to vote against formation of the Tax Increment Financing (TIF) District. He was the only one against the proposal.

Smith accurately notes that better communication is needed.

This was so evident when the SportsPlex was first brought up.

Although a village newsletter came out about two weeks before the hearing, no mention of the SportsPlex was made.

Even so about 120 people showed up for the approval meeting.

The second time the SportsPlex was brought forward five years later there would have been no direct notice to residents until I made the suggestion that a post card be mailed out.

To the credit of the Board, post cards were mailed out.

As a result, a lot more people showed up for the second hearing on the SportsPlex in January than showed up for the first hearing about five or six years ago.

Smith also says that there have been no updates since that hearing, “allowing misinformation to fill the void,” not attributed, but presumably a conclusion of the Village President,

She tells the NWH that there is an agreement between the SportsPlex and the village that is “still in draft form.”

While the Freedom of Information Act does allow draft documents to be kept from the public, sharing such information prior to the election might have eliminated the complaint about voters being ill-informed.

No where is it written that draft documents cannot be made public.

It is just an excuse that many governmental bodies use to keep information from the public.

This draft SportsPlex agreement could have been (and still could be) posted on the village web site.


Serwatka Responds to Board “Everything’s Fine” Comments — 7 Comments

  1. They don’t get it!

    And they won’t get the votes either.

    We may have to get legislators involved to stop this kind of process from continuing, much like they did with community college’s using Alternate Revenue Bonds.

    They are no longer able to do that because it wasn’t fair to the taxpayer and was also a ‘sleazy process’ that needed to be stopped.

  2. Paul, amazing success in your write-in campaign – 507 write-in votes against 326 for #2 & 320 for #3 respectively.

    Congratulations on your in-your-face campaign.

    I wish Presidential campaigns were more like yous.

    Hmm, what are you doing in 2016???

  3. Does anyone wonder what Hillary will tell her grandchild later about integrity and the difference between doing what’s right versus what you can legally squeak by with?

    Heck, how about all our other elected or appointed officials?

    Start with the board members who are pushing for the Sportsplex even as their noses grow further than that of Pinnochio?

    Here’s a start – Get over yourselves elected control freaks.

    Do what is right for the people who have to pay for things.

    Wonder whys people are moving out of McHenry County and Illinois?

    They can’t afford it here.

    The reality hit home a long time ago and ignoring it won’t fix it.

    Those residents who want McMansion school districts want everyone else to pay for it.

    The current president and his cronies are narcissists and seem bent on diminishing the country.

    Get the point?

    Most parents want their kids to have better lives in a country that still exists but Washington seems pretty obtuse about how to make that happen.

  4. Erin Smith has made use a classic, deceptive argumentation tactic known as the “straw man”.

    In using this tactic, Erin first creates a weak and completely false argument — the “straw man”.

    Then she claims falsely that THIS argument is the objection made by opponents.

    Finally, she demolishes this phony argument and completely ignores the REAL objections.

    It won’t work, Erin. People aren’t that stupid.


    Erin, MY objections to the TIF district have NOTHING to do with whatever terms you negotiate with the project’s principals.

    And I am NOT misinformed.

    I’ve been in the municipal finance business for 35+ years.

    I’ve reviewed literally hundreds of TIF financings worth hundreds of millions of dollars.

    I monitor more than twenty TIF financings in my clients’ portfolios.

    My objections are that I don’t think the Village should do TIFs at all, that I especially object to the way THIS TIF was created, and that I think the SportsPlex is too weak an enterprise to deserve the benefit of tax subsidies created at the expense of our local schools.

    I will explain here, once again, Erin, in detail, the three REAL objections I have to the Tax Increment Financing District so you cannot misconstrue them.

    Answer my explicit objections one by one or admit you are wrong.

    (1) I object to the THEORY underlying TIFs.
    (2) I object to the MISUSE of TIFs by local governments.
    (3) I object to the use of TIFs for speculative projects.


    My first objection: to the THEORY underlying TIF financings.

    TIF financings are based on the idea that governments are better than the market in deciding where and how investments should be made — and that this is their job, to speculate with the public’s money!

    They can’t and it isn’t.

    Specifically, a TIF financing assumes that our little local board can see 23 years into the future and say with a high degree of confidence that no development will occur at 47 & 176 without a subsidy.

    No one believes our little Village Board has that kind of prescience — except the Village Board members.

    Even the Board doesn’t believe it; Gene Furey himself said publicly that “we all know development is coming down Route 47”.

    Now, if I am correct, and the theory underlying TIFs is flawed, then there should be support for this position, documentary evidence — history and examples.

    And the evidence exists.

    I, personally, presented to the Board three different independent, academic studies of TIF districts in Illinois.

    All show that TIF districts do NOT result in development beyond what would have occurred anyway.

    Did the Village Board look at this evidence before they created the TIF?

    They did not.

    To research TIFs would have been their fiduciary obligation to the taxpayers, and they failed in their duty.

    Did the Village Board look at this evidence after it was presented to them?

    They did not, again failing in their fiduciary duty to the taxpayers.


    My second objection: the MISUSE of TIFs — how they are abused in practice.

    TIFs are supposed to be used only in blighted areas, and only where there is strong evidence that no development will occur unless there is a TIF.

    They were meant for areas like the south side of Chicago.

    The reasons for these supposedly high statutory barriers are (1) to keep politics out of the process and (2) to keep municipalities from — pardon my French — screwing all the other local governments out of their property taxes.

    The area designated by the Village Board for the TIF district consists of virgin land at 47 & 176 and the Crystal Woods golf course.

    Is this area blighted?

    Absolutely not.

    But the Board designated this area as “blighted”, which was good enough for their lawyer.

    This sleazy act violates the purpose and spirit of the law.

    It is an abuse.

    And is this area likely to remain undeveloped for 23 years?

    Absolutely not.

    Gene Furey himself said so in public.

    So what did the Board do?

    They hired a sham consultant to say the district met the law’s requirements.

    I asked the Board three questions about this consultant:

    (1) How many TIF districts has the consultant REVIEWED?
    (2) How many TIF districts has the consultant APPROVED?
    (3) Does the consultant have any evidence the approved TIFs resulted in development that wouldn’t have occurred anyway?

    The Board didn’t know the answers to any of these questions.

    They didn’t want to know.

    Again, they failed in their fiduciary obligation to the public.

    And the answers were: 50, 50 and, “No”.

    In other words, the consultant has reviewed 50 proposed TIF projects, approved all 50, and has never done any work to determine if the districts actually met the law’s requirements.

    Statistically, even if 90% of all proposed TIFs were effective, the odds that this consultant would find 50 out of 50 good ones is 0.5%.

    Given the strong evidence that TIFs don’t actually work, the odds of 50 out of 50 are actually smaller than one in a trillion.

    And if the Board is wrong, if development would occur in several years without a $130 million TIF ($66 million amortized over 23 years with interest), then the local school district will miss out on as much as $100 million in property taxes.

    If development would have occurred in five years, then the school district would miss out on 18 years of taxes.

    If development would have occurred in ten years, then the school district would miss out on 13 years of taxes.

    The Village Board doesn’t care.

    This beggar-thy-neighbor attitude is horrendous public policy.


    My third objection: subsidizing a speculative project.

    If there were ANY justification for a TIF district, it would be that a large, well-capitalized corporation was willing to put in a major project.

    Even then, we’ve seen that idea fail over and over.

    Witness Motorola in Harvard.

    But, I repeat, IF there were ANY justification for a TIF district, it would require the recipient of the public’s largess to be a well-capitalized, investment grade corporation.

    The SportsPlex is below investment grade, risky — speculative.

    They are the opposite of well capitalized.

    They have zero equity, none.

    They plan to issue “junk” bonds to finance their project.

    The two principals have a history of business failure.

    And the business concept is that kids will fly in from all over the country and drive out to Lakewood for weekend sports tournaments.

    Does this sound likely to anyone other than our Village Board?


    And when I say, “No”, I mean in five years the principals have not been able to find any investors, even when they had federal subsidies, and no other local government has been willing to do business with them.

    Other evidence also supports this skepticism.

    First, the sports complex industry has a high record of failure.

    Second, the population “pyramid” in this country has become a population “football”, by which I mean there are more people in their thirties than there are kids between the ages of zero and ten.

    Every year fewer children are born.

    And the participation rate of children in sports is declining.

    So we know that this 23-year project is facing a market that will decline every year.


    My apologies for such a long essay, but it is necessary to be thorough so that Erin Smith and the Board can’t ignore or mischaracterize the arguments and evidence I present.

    So, in conclusion, I repeat:

    Erin, quit making phony arguments in favor of the TIF and answer my explicit objections one by one. Do it here, in print, on Cal’s blog.

    Or admit you are wrong.

  5. The tif district is declared on huge land area, of which Sportsplex is small part.

    The tif district may or may not produce net sales tax revenue for Village of Lakewood.

    Sales tax revenue, with no-strings-attached, would have occurred within next 35 years without tif, according to one Lakewood Trustee.

    This will all be examined in excruciating and expensive detail during discovery period of litigation made necessary by the formation of this tif. Taxpayers in Lakewood and McHenry County will foot the litigation bill.

    Woodstock D200 taxpayers will not be stuck with the tax burden of Lakewood tif schoolchildren, contrary to what Lakewood managers may be pitching to Lakewood taxpayers. There are remedies under the law to avoid this tax burden dump.

    Lakewood property taxpayers should proceed with this tif under the assumption that they will be footing the bill for the tif residents’ schooling.

    Lakewood taxpayers should also assume that they will need to assume greater financial responsibility for their Fire and Rescue needs.

    Tif plans project a need for vast and expensive new resources. It is naïve and irresponsible to assume that the contractual arrangement with Woodstock Fire and Rescue will continue to be as affordable to Lakewood taxpayers since new build out is projected in Lakewood tif area.

    Lakewood taxpayers will also need to shoulder their share of the newly increased McHenry County taxes engendered by this tif, lasting for the next 35 years, increasing annually with inflation.

    Lakewood tif will enjoy 35 years of tax revenue driven by inflation.

    The tif may have more money than it can spend on stone pillars and copper domes and developer giveaways, while Lakewood and McHenry County taxpayers are paying ever-higher property tax rates in order to facilitate that tax-money-shift.

    Lakewood taxpayers have some power over their own Village government, before activities cementing the tif status proceed.

  6. Paul Serwatka has encouraged residents to scrutinize the votes made by the village board Charlatans.

    Thank you, Paul

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