Lakewood Votes for Flat Tax Levy

Lakewood Village Trustee Paul Serwatka emails of “some exciting news:”

Paul Serwatka

Paul Serwatka

In my write in campaign to be your village trustee, I essentially made 3 promises…

  1. I would fight to stop the annual property tax hikes that have been levied every year for more than a decade.
  2.  I would fight to stop the $66 MILLION TIF Dist./Sportsplex.
  3.  I would provide an entirely new level of transparency.

For the hundreds of you who joined my email list early on and/or follow along on social media, you know that I have, and continue to, fulfill my 3rd promise of providing exceptional transparency to residents.

But, today, I am very proud to announce that after more than a decade of annual property tax hikes… and after much discussion over many months, the Lakewood Village Board voted, last night, to HOLD THE LEVY FLAT this year!

ANOTHER PROMISE FULFILLED!

For those who attended my town hall meetings, you know that I talk quite a bit of the fact that there are still many other taxing bodies in need of substantial reform (none more than the school districts) and while I will continue in my efforts to bring about this reform, I am excited that I can say that this year the Lakewood Village Board has stood with the over-taxed residents!

For those who have supported my write-in campaign to become your village trustee, I thank you for your trust, your support, and your courage. I pledge to continue on in fulfilling my promises to you and in working to achieve responsible, accountable government.

As you may know, in my quest for responsible, accountable government I have decided to run to be our next state representative in the General Assembly in Springfield. Achieving this will help our efforts exponentially, and I hope I can count on your support in this endeavor as well.

You can learn more of my endeavor to Take Back Illinois at www.TakeBackIllinois.com.

= = = = =
The motion was made by Serwatka and seconded by Jeff Iden.

All Trustees–Gene Furey, Jeff Iden, Ken Santowski, Bev Thomas–but Carl Davis, who was absent, voted in favor of the motion.


Comments

Lakewood Votes for Flat Tax Levy — 19 Comments

  1. Lakewood can afford a flat tax levy because the costs for providing fire & rescue for Lakewood tif have been taken on for free, for the next ten years (term of contract), courtesy of Crystal Lake Fire Department.

    So no matter what Lakewood builds in tif, including 100+ low income housing units, and anything else within Lakewood’s power to award zoning variances for, plus all attendant civil liability, it will be the property taxpayers of Crystal Lake Fire District’s responsibility to absorb.

    It is lucky Woodstock is now able to stop subsidizing Lakewood before the new (potentially enormous) demands created by Lakewood tif development begin.

    It looks like the Fire & Rescue contract doesn’t address the need to collect extra to pay for these expected contingencies.

  2. Gotta give credit where credit is due.

    Serwatka said he would waive salary – and he did.

    He said he would provide a new level of transparency – Has he ever!

    He said he would fight to stop annual property tax hikes – Now, after more than a decade of annual hikes, the village flattens the levy??

    Paul, you haven’t even served a full year yet, and you have already proven yourself to be a man who keeps his word and quite literally fights for the people he serves…

    Two words come to mind: THANK YOU!

  3. Susan,

    I think this comment is incorrect “So no matter what Lakewood builds in tif, including 100+ low income housing units, and anything else within Lakewood’s power to award zoning variances for, plus all attendant civil liability, it will be the property taxpayers of Crystal Lake Fire District’s responsibility to absorb.”

    Given that the annual fee in the contract is specifically tied to Lakewood’s total EAV each year, any new growth within Lakewood results in higher fees payable to Crystal Lake Fire. This may be particulary problematic for Lakewood for any new growth within a TIF district.

    The new EAV added to the village from new TIF property increases the annual fee, but the incremental tax revenue from all new TIF property remains sequestered in the new TIF fund.

    That means existing Lakewood taxpayers are stuck paying the incremental fees resulting from new property development within the TIF district.

    I’m not sure what the expected incremental EAV is anticipated to be generated from this new TIF ($10 million?, $20 mil? More?).

    But, you take that incremental amount and use this formula (EAV/100 x 0.49) to determine the incremental annual fees payable to CL Fire.

  4. EAV growth in TIF is not ‘taxable eav’, and I do not believe the contract allows for capture of that ‘phantom’ eav growth.

    Lakewood taxpayers then would NOT be paying any fees for incremental eav growth, Crystal Lake taxpayers would have to eat it on Lakewood’s behalf.

    If you think it can’t happen, look at what Lakewood tif rams down the throat of Woodstock School District 200 taxpayers (lawsuits pending):

    TIF EAV is excluded from taxable eav. D200 must keep taxing a steadily declining EAV base for the children of the tif, who will pay ZERO in property taxes to D200, for the next 35 years.

    This would not be quite as galling if Lakewood participated in any way in Woodstock D200, but it does not.
    All Lakewood children attend Crystal Lake schools, and all Lakewood tax dollars go to Crystal Lake schools.

    Here are some numbers:
    Lakewood’s paid tif consultant report projected $100 million new growth ($33.3 million EAV).

    Woodstock D200 tax rate is over 8% of EAV (that is, over 2.66% of total home fair market value).
    The tif will enjoy extra benefits as the rate rises higher as home values continue to be smashed in Woodstock as a function of its 5% of total fair market value property tax rate.

    So here is what Lakewood tif looks to pull in annually:
    (at a very conservative 3% of total fair market value property tax rate) a 12% tax rate on $33 million EAV is $4,000,000 per year in property taxes.

    Here is what Woodstock D200 taxpayers look to pay annually to subsidize those Lakewood windfall profits:
    60 students as a result of 100 unit tif low income housing resolution July 2015.
    (100 units x 2.8 persons per unit x.22 persons between age 5 and 18= ~60).

    Woodstock d200 levy is $59 million. Claimed enrollment (including pre-K) is 6500.
    $59,000,000/6500= $9077 per student taxed to property taxpayers, annually.

    So the first year, Lakewood tif will cost Woodstock D200 taxpayers 60 students x $9077 = $544620.
    D200 budget rises every year historically far in excess of rate of inflation, so that by the Rule of 72,
    the cost will double before tif is halfway to its conclusion.

  5. at a very conservative 3% of total fair market value property tax rate
    typo should read “4%”

  6. And this is why Paul will make a great state rep.

    Schofield and Wilbrandt are simply tax and spenders.

    Frankly, they are both democrats who pretend to be republicans.

    We need to be honest about that.

    And oh, just because you have a “known” last name does not mean they are the right person for the job.

    I am so sick and tired of some party officials saying that they are supporting him simply because of the name.

    I hope people realize that while Dan is a nice guy, we need a fighter in Springfield, and Dan is not that guy.

  7. Job well done Paul, promises made, promises kept!

    Keep up the good fight!

  8. How Refreshing!

    An elected official who truly “serves” residents and actually follows through on promises?

    From the website named above:

    “Springfield has become a machine that has enriched and empowered a handful of corrupt, career politicians at the expense of the working families of Illinois.

    “We can NOT continue to send politicians to Springfield and expect things to change. We need someone with COURAGE, Someone with PRINCIPLES, someone willing to take a stand and FIGHT for the people of Illinois…”

    Anyone who talks like that deserves our support.

  9. Paul great work, wish McHenry County had 100 more like you in office.

    Next step, reduce the levy by separating “necessary” government expenditures from “excessive” government expenditures.

    By engaging in this exercise, Lakewood like most McHenry County
    municipalities would find themselves with a much trimmer budget.

    This exercise would not hurt the County as well!

  10. I think I would argue that both parties did not intend to have fire protection services for a property or properties dependent on whether that property does or doesn’t reside within a Tax Increment Financing district.

    The agreement only states that the rate is applied to the “total equalized assessed value (EAV) of the Village.”

    It makes no distinction between the “Rate Setting EAV” or the total EAV within the Village’s corporate boundaries.

    So we’re left with either:

    1) The TIF district property is contemplated to be covered under the new agreement, with the Lakewood taxpayers having to foot the incremental bill to CL Fire for the incremental costs, or

    2) CL Fire must provide services to the TIF district, but cannot inflate their fee because the incremental EAV generated by the TIF development is not reflected in Lakewood’s “Rate Setting EAV”, or

    3) CL Fire does not provide fire protection services to TIF district properties under this current agreement.

  11. you can argue that the fire dept. did not intend that, but Lakewood clearly has no trouble shifting tax revenues away from Woodstock D200 for its own benefit, and that may be habitually policy.

    wouldn’t it be wonderful if this very important distinction is clarified in fire contract language now, before a very expensive misunderstanding comes into play?

  12. Susan,

    I would agree with your comment about an expensive misunderstanding, it may be too late to close the barn door on this.

    This particular post was about the flat levy vote and what looks like a rough savings of about $13K to taxpayers.

    Earlier in that same meeting was the vote on CL Fire Dept contract.

    Having run the numbers from the two proposals, unless there was some qualitative issues with the service provided by the WFRD, the 10 year financial cost estimates seem to disfavor the CLFD proposal.

    The WFRD proposal starts at $750k in Year 1, and grows at 1.5%/year through Year 5 and then grows at 3%/yr thereafter, plus a $25k annual CapEx contribution.

    The CLFD proposal starts out at $743k in Year 1 and grows at the Village’s EAV growth rate.

    Based on the Levy documents from that very same meeting, the Village’s EAV is growing 3.4% for next year, which means a 3.4% increase in the CLFD fee for Year 2.

    And, hopefully, given that the overall housing recovery will continue in the future, that means that the Village’s EAV will continue to grow and probably at a rate higher than WFRD’s rate increase of 1.5%.

    If you start compounding EAV at 3.4% (or more) the future CLFD contract annual costs quickly shoots past the WFRD proposal. Additionally, if the Village adds $20-$30 million in additional EAV in the TIF district, the CLFD contract costs become exceptionally expensive.

    One of the things that may have swayed the Trustees was the letter from Catherine Peterson that stated “The formula proposed in the Agreement assures that the annual cost increases only as the Village’s EAV increases and, thus, assuring that there would be additional revenues to pay for the costs.”

    Of course this is not true.

    If EAV increases due to a general improvement in housing prices, that has no effect on levy increases to pay for increased fire protection services under this contract.

    The levy is capped by CPI and, ultimately is set by the Trustees that may decide on something less than CPI (like zero in this case).

    Lastly, the above comments related to the effect of additional TIF EAV dramatically increasing the annual CLFD costs, yet adding nothing to the Village’s general fund in incremental tax revenue, also materially counters the assertion made by Ms. Peterson.

    So, that meeting may have saved taxpayers $13k in the short run, the CLFD vote may needlessly cost tax payers hundreds of thousands of dollars in the long run.

  13. Thank you for the additional explanation regarding the impact of EAV in CLFD’s fire service proposal for the Village of Lakewood.

    The data certainly suggests that village trustees and village administration did not fully appreciate the financial impacts of the CLFD proposal.

    I also openly question their understanding of the operational impacts in the CLFD proposal.

    This includes Paul Serwatka, who voted to accept the CLFD fire service proposal as of Jan 1, 2016.

    Sadly, my eyes have been opened to the rhetoric.

    I believe the next Lakewood board meeting will be scheduled for December 8th.

  14. Welcome to the world of ‘”materially countered assertions by Ms. Peterson”.

    I live in Woodstock and am delighted to be out from under a contract with Lakewood which in my opinion is subsidized by Woodstock Frd taxpayers.

    Know that we Woodstock taxpayers will also be taking action to defend ourselves from the tax dump of no-pay tif children.

    The most equitable solution is to simply re- district those tif students via detachment-annexation proceedings, into the same Crystal Lake schools which currently host Lakewood children and receive all Lakewood procedure tax dollars.

  15. Linda,

    There are a few other problems for Lakewood under this formula that I didn’t mention.

    The agreement sets a “Floor” on the rate of $0.49, there is no cap on how high that rate can go.

    Only 2 years ago the CL Rural Fire Dept rate was only $0.4035.

    It has gone up by 22% in only two years to $0.4937.

    While the administration’s memo only addressed the fact that the CLRF levy extension is capped by CPI, it failed to mention that the EAV for that taxing body was declining resulting in the dramatic rate increase.

    So while the numerator in that taxing body’s tax rate is constrained by CPI, the denominator is completely out of anyone’s control.

    By using the 2014 EAV and tax rates, Lakewood has locked their EAV at a 10-year low point and is being charged at the CLRF rate that is at an all-time high.

    Since the higher the CLRF tax rate is, the more money they receive under the Lakewood agreement, it also creates an incentive for that taxing body to always levy the maximum in order to keep the rate as high as possible.

    Given it is Levy season, it might be interesting to know what the new 2015 CLRF Levy extension and EAV estimate is, and its resulting new tax rate will be for that taxing body.

    Apply the new rate against Lakewood’s new EAV with an increase of 3.4% and you’ll get the total cost of this agreement for Year 2.

    Lastly, and this is just a guess on my part, the EAV base for the CLRF taxing district routinely experiences a decline due to disconnection, which I assume means property being annexed into the City itself.

    This also has the effect of driving the rate upwards.

  16. Trustee Furey’s comment on Woodstock FRD, in minutes of November 24 2015 Lakewood Board meeting:

    “They have performed many services for the Village without any charges or recognition”

    THAT MEANS THAT WOODSTOCK PROPERTY TAXPAYERS HAVE SUBSIDIZED THOSE ‘MANY SERVICES’ TO LAKEWOOD.

  17. Also, see abatement of taxes ordinance 2015-(47) whereby tif residents do not pay taxes to Lakewood:

    so Lakewood property taxpayers are now officially subsidizing the tif ‘taxpayers’.

Leave a Reply

Your email address will not be published.