The debate continues between Lakewood bond analyst Steve Willson and commenter Ted Hill.
Here Willson replies to the argument made Friday by Hill:
Ted, when you say, “the impact will be negligible or zero to D200″, I must disagree.Steve Willson
Look again at my argument about the schools.
If Lakewood goes ahead with the TIF, the schools will receive no incremental revenue for 23 years — maybe 35.
If Lakewood does NOT go ahead with the TIF district, and development happens ten years from now, then the school district will be FAR AHEAD IN TERMS OF THE TAX REVENUE IT WILL RECEIVE FOR YEARS 11 THROUGH 23, and maybe through year 35.
That disproves your statement that “the impact will be negligible or zero to D200″.
To prove your point, you would need very strong evidence that no development will occur without the TIF.
So far, the Village has produced exactly one piece of “evidence” to this point: a sham study by a sham consultant, a bought-and-paid for opinion with no evidence to support it whatsoever.
Further, as Susan noted above, the TIF district is much larger than just the area targeted for the SportsPlex, and some of that area is zoned residential.
If it is indeed developed and no incremental revenue goes to the school district, then THE SCHOOL DISTRICT WILL HAVE MORE CHILDREN TO EDUCATE, BUT NOT THE TAX DOLLARS THAT GO WITH ADDITIONAL DEVELOPMENT.
So for TWO reasons, going ahead with the TIF is likely to cost the school tax money they would otherwise receive.
Now, if you see an error in my reasoning, please point it out to me.
But otherwise, I must conclude that Lakewood’s TIF district has a high probability of hurting the school district and all the other local governments.
And the law requires strong evidence to the contrary in order to proceed.
So does good judgment.
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As for development now versus later, if the TIF district costs more in tax revenues for all the local area governments than Lakewood gains in additional sales taxes, then it is bad for the area even if it is “good” for the Lakewood government.
Such an outcome is horrendous public policy, and if board members support such a policy then they have come to identify “good for the GOVERNMENT of Lakewood” with “good for the COMMUNITY of Lakewood” — two entities that are NOT identical.
This risk — that board members become advocates for larger and larger government, as long as it’s THEIR government — is an inherent danger in government because most people who run for office do so because they want to “do something” and it is especially strong in people who have been on boards a long time because they come to identify more and more with the government itself and to think anyone who disagrees just doesn’t understand.
This condition is often called the “edifice complex”, the desire to “do something” to show how great you were, and the willingness to rationalize harm to others as long as it’s good for the particular board on which you sit.
That’s how our Village Board has come to believe that ANY deal, even with the weakest business entity possible, is better than NO deal — as long as it happens on their watch.
They don’t want to wait, they are desperate to achieve something NOW, and so even when every other government has turned down the SportsPlex, the sitting Lakewood board is still willing to cut a deal, any deal, to show they “did something”.
No, Ted, the law that permitted TIF districts did not envision pristine land and golf courses being designated as “blighted”.
The law did not anticipate using sham consultants to declare what we all know is false: that development will not occur without a TIF.
And the law did not anticipate extremely weak businesses benefitting from a TIF.
The law is quite clear that TIFs are to be used only if there is strong evidence that development with a TIF will substantially exceed what will happen without a TIF.
How is that possible if our board cuts a deal with a business that hasn’t been able to get off the ground for five years, and that has zero equity?
I appreciate your desire for “something” to happen there, Ted.
I wish it would, too.
But we can’t just throw the taxpayers’ money at it blindly because we want something to happen.
We have to weigh all the evidence.
And when you weigh all the evidence, three things become clear:
(1) most TIFs don’t work
(2) the justification for this TIF violates the intent of the law and tries to sneak by on the flimsiest of technicalities and the hope it is not challenged in court; and
(3) giving tax breaks to extremely weak businesses when there is a strong likelihood such tax breaks will hurt our schools is horrendous public policy.
One of the absurd aspects of this TIF is that over the cumulative five year period (2008 – 2013) which EAV was analyzed by the TIF consultant (SB Friedman), EAV declined more outside the TIF, than the balance of the village.
EAV in vacant parcels (aka blighted area) declined 22.91% inside the TIF.
EAV in vacant parcels (aka blighted area) declined 24.95% in the balance of the village.
EAV in improved parcels (aka conservation area) declined 20.58% inside the TIF.
EAV in improved parcels (aka conservation area) declined 24.95% in the balance of the village.
Source: Table 1 & 2, Village of Lakewood 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.
BORING!!!
(65 ILCS 5/11-74.4-3) (from Ch. 24, par. 11-74.4-3)
Sec. 11-74.4-3. Definitions. The following terms, wherever used or referred to in this Division 74.4 shall have the following respective meanings, unless in any case a different meaning clearly appears from the context.
(a) For any redevelopment project area that has been designated pursuant to this Section by an ordinance adopted prior to November 1, 1999 (the effective date of Public Act 91-478), “blighted area” shall have the meaning set forth in this Section prior to that date.
On and after November 1, 1999, “blighted area” means any improved or vacant area within the boundaries of a redevelopment project area located within the territorial limits of the municipality where:
(1) If improved, industrial, commercial, and residential buildings or improvements are detrimental to the public safety, health, or welfare because of a combination of 5 or more of the following factors, each of which is (i) present, with that presence documented, to a meaningful extent so that a municipality may reasonably find that the factor is clearly present within the intent of the Act and (ii) reasonably distributed throughout the improved part of the redevelopment project area:
(A) Dilapidation. An advanced state of disrepair or neglect of necessary repairs to the primary structural components of buildings or improvements in such a combination that a documented building condition analysis determines that major repair is required or the defects are so serious and so extensive that the buildings must be removed.
(B) Obsolescence. The condition or process of falling into disuse. Structures have become ill-suited for the original use.
(C) Deterioration. With respect to buildings,defects including, but not limited to, major defects in the secondary building components such as doors, windows, porches, gutters and downspouts, and fascia. With respect to surface improvements, that the condition of roadways, alleys, curbs, gutters, sidewalks, off-street parking, and surface storage areas evidence deterioration, including, but not limited to, surface cracking, crumbling, potholes, depressions, loose paving material, and weeds protruding through paved surfaces.
(D) Presence of structures below minimum code standards. All structures that do not meet the standards of zoning, subdivision, building, fire, and other governmental codes applicable to property, but not including housing and property maintenance codes.
(E) Illegal use of individual structures. The use of structures in violation of applicable federal, State, or local laws, exclusive of those applicable to the presence of structures below minimum code standards.
(F) Excessive vacancies. The presence of buildings that are unoccupied or under-utilized and that represent an adverse influence on the area because of the frequency, extent, or duration of the vacancies.
(G) Lack of ventilation, light, or sanitary facilities. The absence of adequate ventilation for light or air circulation in spaces or rooms without windows, or that require the removal of dust, odor, gas, smoke, or other noxious airborne materials. Inadequate natural light and ventilation means the absence of skylights or windows for interior spaces or rooms and improper window sizes and amounts by room area to window area ratios. Inadequate sanitary facilities refers to the absence or inadequacy of garbage storage and enclosure, bathroom facilities, hot water and kitchens, and structural inadequacies preventing ingress and egress to and from all rooms and units within a building.
(H) Inadequate utilities. Underground and overhead utilities such as storm sewers and storm drainage, sanitary sewers, water lines, and gas, telephone, and electrical services that are shown to be inadequate. Inadequate utilities are those that are:
(i) of insufficient capacity to serve the uses in the redevelopment project area,
(ii) deteriorated, antiquated, obsolete, or in disrepair, or
(iii) lacking within the redevelopment project area.
(I) Excessive land coverage and overcrowding of structures and community facilities. The over-intensive use of property and the crowding of buildings and accessory facilities onto a site. Examples of problem conditions warranting the designation of an area as one exhibiting excessive land coverage are: (i) the presence of buildings either improperly situated on parcels or located on parcels of inadequate size and shape in relation to present-day standards of development for health and safety and (ii) the presence of multiple buildings on a single parcel. For there to be a finding of excessive land coverage, these parcels must exhibit one or more of the following conditions: insufficient provision for light and air within or around buildings, increased threat of spread of fire due to the close proximity of buildings, lack of adequate or proper access to a public right-of-way, lack of reasonably required off-street parking, or inadequate provision for loading and service.
(J) Deleterious land use or layout. The existence of incompatible land-use relationships, buildings occupied by inappropriate mixed-uses, or uses considered to be noxious, offensive, or unsuitable for the surrounding area.
(K) Environmental clean-up. The proposed redevelopment project area has incurred Illinois Environmental Protection Agency or United States Environmental Protection Agency remediation costs for, or a study conducted by an independent consultant recognized as having expertise in environmental remediation has determined a need for, the clean-up of hazardous waste, hazardous substances, or underground storage tanks required by State or federal law, provided that the remediation costs constitute a material impediment to the development or redevelopment of the redevelopment project area.
(L) Lack of community planning. The proposed redevelopment project area was developed prior to or without the benefit or guidance of a community plan. This means that the development occurred prior to the adoption by the municipality of a comprehensive or other community plan or that the plan was not followed at the time of the area’s development. This factor must be documented by evidence of adverse or incompatible land-use relationships, inadequate street layout, improper subdivision, parcels of inadequate shape and size to meet contemporary development standards, or other evidence demonstrating an absence of effective community planning.
(M) The total equalized assessed value of the proposed redevelopment project area has declined for 3 of the last 5 calendar years prior to the year in which the redevelopment project area is designated or is increasing at an annual rate that is less than the balance of the municipality for 3 of the last 5 calendar years for which information is available or is increasing at an annual rate that is less than the Consumer Price Index for All Urban Consumers published by the United States Department of Labor or successor agency for 3 of the last 5 calendar years prior to the year in which the redevelopment project area is designated.
(2) If vacant, the sound growth of the redevelopment project area is impaired by a combination of 2 or more of the following factors, each of which is
(i) present, with that presence documented, to a meaningful extent so that a municipality may reasonably find that the factor is clearly present within the intent of the Act and
(ii) reasonably distributed throughout the vacant part of the redevelopment project area to which it pertains:
(A) Obsolete platting of vacant land that results in parcels of limited or narrow size or configurations of parcels of irregular size or shape that would be difficult to develop on a planned basis and in a manner compatible with contemporary standards and requirements, or platting that failed to create rights-of-ways for streets or alleys or that created inadequate right-of-way widths for streets, alleys, or other public rights-of-way or that omitted easements for public utilities.
(B) Diversity of ownership of parcels of vacant land sufficient in number to retard or impede the ability to assemble the land for development.
(C) Tax and special assessment delinquencies exist or the property has been the subject of tax sales under the Property Tax Code within the last 5 years.
(D) Deterioration of structures or site improvements in neighboring areas adjacent to the vacant land.
(E) The area has incurred Illinois Environmental Protection Agency or United States Environmental Protection Agency remediation costs for, or a study conducted by an independent consultant recognized as having expertise in environmental remediation has determined a need for, the clean-up of hazardous waste, hazardous substances, or underground storage tanks required by State or federal law, provided that the remediation costs constitute a material impediment to the development or redevelopment of the redevelopment project area.
(F) The total equalized assessed value of the proposed redevelopment project area has declined for 3 of the last 5 calendar years prior to the year in which the redevelopment project area is designated or is increasing at an annual rate that is less than the balance of the municipality for 3 of the last 5 calendar years for which information is available or is increasing at an annual rate that is less than the Consumer Price Index for All Urban Consumers published by the United States Department of Labor or successor agency for 3 of the last 5 calendar years prior to the year in which the redevelopment project area is designated.
(3) If vacant, the sound growth of the redevelopment project area is impaired by one of the following factors that (i) is present, with that presence documented, to a meaningful extent so that a municipality may reasonably find that the factor is clearly present within the intent of the Act and (ii) is reasonably distributed throughout the vacant part of the redevelopment project area to which it pertains:
(A) The area consists of one or more unused quarries, mines, or strip mine ponds.
(B) The area consists of unused rail yards, rail tracks, or railroad rights-of-way.
(C) The area, prior to its designation, is subject to (i) chronic flooding that adversely impacts on real property in the area as certified by a registered professional engineer or appropriate regulatory agency or (ii) surface water that discharges from all or a part of the area and contributes to flooding within the same watershed, but only if the redevelopment project provides for facilities or improvements to contribute to the alleviation of all or part of the flooding.
(D) The area consists of an unused or illegal disposal site containing earth, stone, building debris, or similar materials that were removed from construction, demolition, excavation, or dredge sites.
(E) Prior to November 1, 1999, the area is not less than 50 nor more than 100 acres and 75% of which is vacant (notwithstanding that the area has been used for commercial agricultural purposes within 5 years prior to the designation of the redevelopment project area), and the area meets at least one of the factors itemized in paragraph (1) of this subsection, the area has been designated as a town or village center by ordinance or comprehensive plan adopted prior to January 1, 1982, and the area has not been developed for that designated purpose.
(F) The area qualified as a blighted improved area immediately prior to becoming vacant, unless there has been substantial private investment in the immediately surrounding area.
Great information Mark and Susan!
There is one thing I have not seen anyone comment on;
What is the population within a one mile radius of this 47/176 intersection? Ditto for a two mile radius?
What major retailer will want to invest in a business out in the country, in a county that has a declining population?
I’m with Jim here.
We are facing WWIII and Lakewood wants to nitpik something that will never happen.
The Lakewood Route 47 / 176 TIF Eligibility Study used the Illinois state law classification of “blighted area” for vacant parcels and “conservation area” for improved parcels.
In both cases, EAV in the Village of Lakewood declined more outside the proposed TIF area, as opposed to inside the TIF, in the 5 year span studied by the TIF consultant (2008 – 2009 through 2012 – 2013).
While technically apparently that is allowed legally, it defies common sense.
The TIF eligibility study completely ignored that data point, not even mentioning it.
Rather, one has to add the figures.
Part of what the eligibility study did say about declining EAV follows.
Vacant 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.”
+++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
Improved 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 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 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.”
Oops there’s a typo in my original sentence on 04/18/2015 at 8:45 am.
It should read.
One of the absurd aspects of this TIF is that over the cumulative five year period (2008 – 2013) which EAV was analyzed by the TIF consultant (SB Friedman), EAV declined more outside the TIF, than inside the TIF.
Basically it seems information was just cherry picked in creating the TIF study, as opposed to presenting a complete picture.
The TIF allows the village to obtain an estimated $66 million over 23 years from taxpayers, and that’s $66 million which the village would not have otherwise obtained.
Where’s the estimated return on investment study for the $66 million, showing year by year, parcel by parcel, in sales tax dollars or some level of detail, how taxpayers would recoup the $66 Million.
There is none.
There’s also no parcel by parcel detail for how the $66 million is generated in the first place, which is why so many people are confused about TIFs.
The McHenry County Clerk should explain the TIF process to taxpayers in detail, and how TIF alters the taxing district levy / extension.
EAV New Growth is part of the taxing district levy / extension formula.
The County Clerk’s office is the matchmaker creating tax rates with taxing district levy / extension process on one side, and the Assessor property value process on the other side.
So to understand TIF one needs to understand the taxing district levy / extension formula and what happens at the county clerk’s office to determine how the taxing districts get their money from taxpayers.
Any finance scheme which one doesn’t fully understand should be treated with caution.
Follow the money.
The important point is that a legal tif has been formed by Lakewood, and unless legal validity is challenged, will stand .
In order to challenge, the details of legal basis claimed to justify tif must be scrutinized.
This several square mile area of tif will produce tax revenues that go exclusively to Lakewood managers.
Lakewood managers give the money to developers.
The tif will last 24 years by law. At that point Illinois politicians will grant a 12 year extension.
This tif will be massively profitable… to Lakewood manager and those developers she favors.
Lakewood taxpayers may see some relief in the municipal portion of property bill, but will pay much higher rates to every other taxing body, in order to make up for the tax payments diverted from tif properties.
Everything whatsoever that is built in tif area (several square miles) will generate ‘tax increment financing’ revenue. Forget Sportsplex,think of residential, retail and commercial.
Lakewood could zone a power plant there and collect big revenue.
Lakewood managers seem to have personal profit as sole motivational factor, so why not?
There are several methods available to finance c
The important point is that a legal tif has been formed by Lakewood, and unless legal validity is challenged, will stand .
In order to challenge, the details of legal basis claimed to justify tif must be scrutinized.
This several square mile area of tif will produce tax revenues that go exclusively to Lakewood managers.
Lakewood managers may then give the money to developers.
The tif will last 24 years by law.
At that point Illinois politicians will grant a 12 year extension.
This tif will be massively profitable… to Lakewood manager and those developers she favors.
Lakewood taxpayers may see some relief in the municipal portion of property bill, but will pay much higher rates to every other taxing body, in order to make up for the tax payments diverted from tif properties.
Everything whatsoever that is built in tif area (several square miles) will generate ‘tax increment financing’ revenue.
Forget Sportsplex,think of residential, retail and commercial.
Lakewood could zone a power plant there and collect big revenue.
Lakewood managers seem to have personal profit as sole motivational factor, so why not?
There are several conventional methods available to finance infrastructure build out.
But with conventional funding methods, tax money from that area would go to school, County, townships, roads, MCC, MCCD, library,….instead of going to Lakewood manager.
The TIF Eligibility study states 55% of the TIF area is vacant, and has a very general map of the location of the vacant area.
That map is on page 7 (pdf page 9), and is titled, Map 2: RPA Boundary and Existing Land Use.
The map identifying vacant land is not broken down by PIN.
Here are a few sentences from the TIF Eligibility Study about the vacant land.
“Supporting this finding, over half of the RPA (22 out of 37 parcels, or 55% of total land area) is vacant.”
“Approximately 59% of the RPA parcels (22 out of 37 parcels) are vacant.”
So which is it, 55% or 59%?
Has any skeptic independently verified the findings that the land labeled vacant has not been used for agricultural purposes in the last 5 years, or is in fact actually vacant according to the TIF law?
Once again, what are the PINs of the vacant land?
Those PIN numbers would be very helpful, with a precise acreage measurement and description of vacant land in each PIN.
That should be available via FOIA request to the the village.
The TIF Eligibility study contains Appendix 2: Summary of EAV (by PIN), which contains each PIN and the 2013 EAV of each PIN in the TIF.
But there is no mention of the vacant land acreage in each PIN, there is no mention of the location of the vacant land, and the acreage per PIN is not listed.
Once the vacant land PIN data is obtained, look at Google maps and drive around the parcels.
You can do that with the general map in the TIF Eligibility study, but the PIN data would allow one to be much more precise.
The TIF law says a parcel cannot be deemed vacant if it has been used for agricultural purposes in the last 5 years.
But there’s exceptions.
“(v) As used in subsection (a) of Section 11-74.4-3 of this Act, “vacant land” means any parcel or combination of parcels of real property without industrial, commercial, and residential buildings which has not been used for commercial agricultural purposes within 5 years prior to the designation of the redevelopment project area, unless the parcel is included in an industrial park conservation area or the parcel has been subdivided; provided that if the parcel was part of a larger tract that has been divided into 3 or more smaller tracts that were accepted for recording during the period from 1950 to 1990, then the parcel shall be deemed to have been subdivided, and all proceedings and actions of the municipality taken in that connection with respect to any previously approved or designated redevelopment project area or amended redevelopment project area are hereby validated and hereby declared to be legally sufficient for all purposes of this Act.
For purposes of this Section and only for land subject to the subdivision requirements of the Plat Act, land is subdivided when the original plat of the proposed Redevelopment Project Area or relevant portion thereof has been properly certified, acknowledged, approved, and recorded or filed in accordance with the Plat Act and a preliminary plat, if any, for any subsequent phases of the proposed Redevelopment Project Area or relevant portion thereof has been properly approved and filed in accordance with the applicable ordinance of the municipality.
http://ilga.gov/legislation/ilcs/ilcs4.asp?DocName=006500050HArt.+11+Div.+74.4&ActID=802&ChapterID=14&SeqStart=208900000&SeqEnd=211000000
Here’s a report about TIFs from 2003.
Good Jobs First
Straying from Good Intentions: How States are Weakening Enterprise Zone and Tax Increment Financing Programs.
http://www.goodjobsfirst.org/sites/default/files/docs/pdf/straying.pdf
I would like to point out probably a minor issue but interesting just the same:
Five years ago Lakewood annexed the golf course in question into Lakewood.
The board declared this annexation good for Lakewood because the new annexed “businesses” would immediately provide tax revenue that was so needed by Lakewood.
NOW Lakewood has declared this property “blighted”?
Does anyone else see a problem with this?
1. If they can’t project out 5 years, how the heck should we expect them to project out 20-30?!!!
2. Or the Lakewood Board just swept that fact under the rug hoping no one would remember?
Crystal Woods and Craig Woods Golf Courses publicize Woodstock addresses.
They were annexed to Lakewood 5 years ago?
Were they not being annexed to Lakewood in conjunction with the Lakewood IL Route 476 & IL Route 176 TIF?