Part 4 – Lakewood TIF Debate Continues

Reader Ted Smith replies to Steve Willson’s Part 1 critique of Lakewood’s Tax Increment Financing District and SportsPlex proposals:

Steve, you are obviously an intelligent and passionate person.

But I do find flaw in at least part of your reasoning:

“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.”

Adverse effects to the local schools will only occur if additional school children move into the TIF district.

The TIF district is aimed at business development not residential development.

Lakewood TIF with buildings 12-14

Lakewood TIF District

Perhaps the Sportsplex is too weak an enterprise to deserve tax subsidies; to date, they have received none.

A final proposal has not been brought before the board.

The board should be able to evaluate all projects and all businesses should have the opportunity to present to the board.

As to the studies you presented.

I do not have the benefit of having reviewed your studies but I take it at face value that

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

Fair enough.

Was any timing of development changed?

In other words, did development occur more quickly (though ultimately to the same level as without) than would have occurred without the TIFs?

I don’t know the answer but given market forces I would assume that development in an area would occur more quickly with incentives.

I am only posing the question.

If, the answer is yes, that development did occur more quickly, then a NPV (for other readers Net Present Value) analysis would be able to show if the cash flows (to the village TIF fund and from sales tax revenue) from the more quickly developed business made the TIF worthwhile.

I understand you are philosophically opposed to TIFs.

No argument on your philosophy.

However, a TIF is a tool set up by the State for this purpose (again I do understand that you do not feel that it meets the State TIF intent).

If the Village does not use the TIF tool to encourage and accelerate development in the 47/176 area, what mechanism do you feel would be more appropriate?

I do want business development at 47/176.

I do not wish to live in an exclusively bedroom community.

I would like to see business sales tax dollars generate revenue to the village sooner rather than later.

I would like business to shoulder the burden of taxes so mine don’t accelerate as quickly or potentially even get reduced.

I don’t get a sense that you offer an alternative to achieve this goal.


Comments

Part 4 – Lakewood TIF Debate Continues — 4 Comments

  1. Area included in the tif is several square miles, not just the Sportsplex area.

    The plan posted by Lakewood included extensive residential zoning.

    This leave no choice for Woodstock D200 taxpayers but to challenge the legality of the tif, and/or pursue school district detachment for the “New Lakewood ” tif area.

    Redistricting the tif into the districts currently serving Lakewood makes sense, as those districts collect all taxes fromLakewood.

    Lakewood citizens will feel differently about routing money to developers through the hands of
    Village managers when a good deal of that money must come from their own property tax bill, as they pay for the next 35 years of educating tif schoolchildren.

    How many residential units can be expected in tif, and how many school children will be produced?

    Lakewood is not in compliance with Illinois Affordable Housing Act. At present they need to add 79 units valued at around $90,000.

    As they have several square miles of tif also zoned residential , more housing units can be presumed, 10% of which also need to to be AHA compliant.

    So a safe estimate is that 100 low income housing units will soon be built into Lakewood tif district.

    By census stats (about 3 persons per household and about 20% of population school aged) that would predictably create 60 school children.

    In D200, taxpayers are currently billed around $10,000 per year per pupil. (CLD 47&D155 may be less, at present).

    So we can assume that in the near term there will be around $600,000 per year of new property tax burden placed upon host school district. ( D200 taxpayers, in addition to D200 Board, can petition for detachment from D200 as a result of this tif).

    As the years pass, inflation alone raises that cost significantly.

    Tifs can live 35 years.

    The only thing that can limit their lifespan to 24 years is the honor and integrity of Illinois politicians 24 years from now.

    Many profitable tifs in Chicago received 12 year extensions courtesy of Springfield, and are older than 24.

    All costs of tif children will have to be absorbed by taxpayers within the school district but outside the tif ( because all the tif property tax money goes to municipal managers to distribute at their pleasure)

    Another subsidization of Lakewood by Woodstock taxpayers would be the provision of services from Woodstock Fire and Rescue.

    There is an annual contract in place, and as conditions change with the building out of this tif, Woodstock citizens will not be inclined to further subsidize Lakewood with disproportional funding of the Woodstock fire department.

    Lakewood citizens may think that tif generates ‘free’ money, and that simply isn’t the case.

    The money is collected from property taxpayers ( in order to pay costs of services used –but not paid for–by all tif development property) and re-routed.

    Lakewood may collect sales tax revenue, but Lakewood citizens will individually see their property tax bills rise in all other categories: school, fire and rescue, MCC, MCCD, McHenry County government.

  2. Ask Lakewood manager, WHY is tif area so large?

    Why is such an enormous budget projected for necessitating commercial development at the corner of two State Routes, when much of the responsibility for roads lies with IDOT?

    The tif was made to cover the entire area in map so as to be a profit center.

    Many Chicago tifs are enormously profitable.

    But who makes the profits?

    The property tax money from all development goes to Lakewood Village manager.

    Developers may woo that manager hoping for a grant, and the courting process may be beneficial to the City manager, if only in intangible ways. Long after any site improvements have been paid for, the tif will (presumably)throw off millions of dollars a year to be spent as Village manager desires.

    She may grant money to a developer to purchase land at any price.

    She may grant money to a developer money to build on land she granted him money to purchase.

    Example: everyone can look up the recent news about Quinn giving $10 million to Cinespace to buy land, which land reportedly had interim purchase contracts in place (Rauner made them give the money back).

    So, Developers and City manager profit.

    Who loses?

    All taxpayers (including those in tif district) who must pay higher property taxes in order to pay for all the services provided by taxing bodies other than the Village of Lakewood.

    These services include school, fire and rescue, police protection not provided by Lakewood, road building and maintenance for benefit of tif development, MCC and MCCD, County and township government expenses, and all the unfunded pension liability, and Cadillac health plan cost and excise tax liabilities.

    The taxpayer subsidies to the tif will go on for 35 years.

    Think of inflation since 1980.

    There will be cost inflation in the next 35 years, and all of that cost will be borne by taxpayers.

    What happens when tif finally expires?

    In 35 years, I think it is fair to anticipate that any building will be considered ‘blight’, and argue for another tif to pay them to not go away.

    Drive through Woodstock, see the ‘Old’ Farm and Fleet building at Rtes 14&47, just up the road from the ‘New’ Farm and Fleet. Old F&F has been vacant for years.

    The ‘Old’ Jewel, just across the street from the ‘New’ Jewel, vacant for years before Office Depot opened and closed there, now vacant again.

    Tifs create an incentive for development that has to do with re-direction of public tax money.

    If potential developers insist on infrastructure being provided, there are plenty of ‘traditional’ funding methods available to municipalities.

    Lakewood chose a tif, and made it a HUGE tif.

    No development can occur without tifs?: California recently banned tifs.

    Since then, housing starts have spiked.

  3. Village of Lakewood, Illinois

    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
    Existing Land Use

    Based on SB Friedman’s research, five (5) land uses have been identified within the IL-47 & IL-176 Redevelopment Project Area (RPA):

    – Vacant
    – Commercial
    – RESIDENTIAL
    – Recreation/Open Space
    – Infrastructure/Utilities

    Vacant.

    Approximately 59% of the RPA parcels (22 out of 37 parcels) are vacant.

    Commercial.

    Commercial land in the RPA includes two (2) parcels, both located along IL-176 in the northwest corner of the RPA.

    RESIDENTIAL.

    Ten (10) parcels within the RPA contain residential uses.

    Recreation/Open Space.

    The Crystal Woods and Craig Woods Golf Clubs account for three (3) parcels within the RPA.

    Infrastructure/Utilities.

    There is a Commonwealth Edison power line that crosses three (3) vacant parcels in the northern portion of the RPA.

    The Land Use Map shows PLANNED commercial and office land uses throughout much of the RPA, with some recreational, open space and estate RESIDENTIAL uses.

    Proposed Future Land Use

    The future land use of the RPA reflects the objectives of this Redevelopment Plan and Project, which are to support the improvement of the RPA as an active mixed-use district and to support other improvements that serve the redevelopment interests of the local community, business owners and the Village.

    The proposed objectives are compatible with historic land use patterns and support current development trends in the area.

    The proposed mixed-use designation is shown on Map 7 on the following page.

    The future land use designation allows for the following uses:

    – Commercial
    – Entertainment/Recreation
    – Public Rights-of-Way
    – Park/Open Space
    – RESIDENTIAL

    HOUSING Impact and Related Matters

    As set forth in the Act, if a redevelopment plan for a redevelopment project area would result in the displacement of RESIDENTS from 10 or more inhabited RESIDENTIAL units, or if the redevelopment project area contains 75 or more inhabited RESIDENTIAL units and a municipality is unable to certify that no displacement will occur, the municipality must prepare a HOUSING Impact Study and incorporate the study in the Redevelopment Plan and Project document.

    The RPA contains an estimated 10 RESIDENTIAL units and it is anticipated that fewer than 10 RESIDENTIAL displacements will result from this Redevelopment Plan and Project.

    Therefore, a HOUSING Impact Study is not required under the Act.

    Conformance to the Plans of the Village

    The Act specifies that the Redevelopment Plan and Project “conform to the comprehensive plan for the development of the municipality as a whole.”

    The proposed land uses described in this Redevelopment Plan are consistent with the Village of Lakewood Comprehensive Plan (2005) and updated Future Land Use Map (2010).

    The Land Use Map shows: planned commercial and office uses through the northern portion of the RPA and at the corner of Ballard Road and IL-47; recreation uses through the central portion of the RPA, where the golf course is currently located; and estate RESIDENTIAL uses (RESIDENTIAL development with a density of approximately 0.7 dwelling units per acre) along most of Ballard Road andportions of IL-47.

    The redevelopment opportunities identified in this Redevelopment Plan and Project will be substantially supported and their implementation facilitated through the creation of the RPA.

    Table 3. Estimated TIF-Eligible Redevelopment Project Costs
    Project/Improvement Cost —————————————————— Estimated Project

    Costs

    Costs of Studies – $1,000,000

    Site Marketing Costs – $2,000,000

    Property Assembly (including acquisition, site preparation and environmental remediation) – $14,000,00 Rehabilitation of Buildings, Fixtures and Leasehold Improvements – $2,500,000
    Public Works or Improvements (including streets and utilities, parks and open space, and public facilities) – $15,000,000

    Costs of Job Training – $5,000,000

    Taxing District Capital Costs [1] – $500,000

    Financing Costs – $12,000,000

    Relocation Costs – $1,000,000

    Interest Costs (developer or property owner) – $12,000,000

    Affordable HOUSING Construction – $1,000,000

    Total Redevelopment Project Costs [2] – $66,000,000

  4. ACTION NEEDED

    Please contact your state representative and ask her or him to Vote NO on HB3621, a bill that would prevent the public from knowing what some municipalities are doing with tax dollars and the facilities owned and operated with taxpayer money.

    HB3621 would exempt municipalities from disclosing key financial information about contracts and events held at publicly-owned venues, including convention and entertainment facilities (like the Allstate Arena and the Donald E. Stephens Convention Center in Rosemont) from public view.

    HB3621 would throw a veil of secrecy over deals worth hundreds of thousands of dollars, making it impossible for the public to know what their public officials are doing, or to hold them accountable.

    Please contact your State Representative TODAY!

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