Lakewood Trustee Says Abolishing TIF District Will Cost Taxpayers $220,000

This came in an email from Lakewood Village Trustee Jason McMahon.  McMahon was appointed to the Board by former Village President Erin Smith after Ken Santowski resigned.

Political Promise to Cost Lakewood Taxpayers 12%

Lakewood Residents,

A political promise to eliminate the Lakewood TIF will be rushed through the Village Board meeting on June 13, 2017.

Dissolving the TIF will place approximately $220,000 worth of TIF expenses on Lakewood residents.

Lakewood’s TIF District.

This will cost EVERY Lakewood home an average of $150; a 12% INCREASE in our Lakewood property taxes.

To put it another way, over the last four years Lakewood has spent an average of $230,000 per year repairing and replacing our roadways.

The cost of dissolving the TIF is equivalent to an entire year of road maintenance and better roads.

Well maintained roads help support our property values.

To significantly reduce our property taxes we need sales tax income (more about this in my next post).

The main goal of the TIF is to bring infrastructure to the corner of Routes 47 and 176 to support commercial development.

This will generate new property and sales tax revenue for Lakewood, which will have a greater impact on lowering our property taxes than simply trying to cut 10% from Lakewood’s property tax levy.

The Routes 47 and 176 intersection is one of the only areas Lakewood has to develop significant sales tax income.

Without the TIF it would be extremely difficult to pay for the necessary infrastructure, therefore, no way to increase funds coming into Lakewood to offset our property taxes.

TIF’s are fairly simple to understand. (Dollar amounts are for illustrative purposes only.)

  • Upon creation, a property value “baseline” is set by the TIF; let’s say $1,000,000 in property value.  The property generates approximately $35,400 in tax revenue for our various tax bodies.  Neither your property value nor the amount of taxes paid changes with TIF creation.
  • As property inside the TIF is developed, the property value rises; let’s say to $3,000,000 in property value.

o   This generates $106,300 in tax revenue; however, the amount over $35,400 (approximately $70,900) is diverted into the TIF to pay for the infrastructure needed to support the development.

o   Taxing bodies agree to this because once the TIF ends, they benefit from the significant increase in property taxes, a benefit they would not have received if they had not worked together to support commercial development.  Schools alone receive almost 72% of the increase.

  • When the TIF expires or is dissolved, (in our case, when the infrastructure has been paid for) the property value “baseline” disappears and all the taxing bodies receive the full benefit of their investment.  This inflow of new tax dollars should help reduce the burden on existing taxpayers.

We can all agree there are MANY examples of mismanaged TIF’s throughout Illinois.

Lakewood now has a chance to show how a TIF can be used for the benefit of ALL, when used for the proper purpose and managed properly.

We can easily modify the TIF and restrict the use of TIF funds by amending the documents without dissolving the TIF and WITHOUT losing money.

There is no eminent danger to Lakewood taxpayers in leaving the TIF open, but there is a cost to closing it.

You may have been lead to believe Lakewood taxpayers could be forced to pay $9,000 per student if residential development occurs in the TIF area.

While possible, it would NEVER happen.

Any housing development in the TIF area would need to gain approval from Lakewood for a zoning change.

Lakewood could simply disconnect that area from the TIF or impose an SSA on the development to cover the cost. No threat to residents.

We have a strong, conservative board for the next four years and without significant development by 2022, the TIF will dissolve on its own after having paid back more of the $220,000 it owes Lakewood.

I urge you to contact our new Village President, Paul Serwatka, and his tax fighter team: Phil Stephan, Amy Odom and Rich Ritchie and urge them to stop this process that will cost Lakewood taxpayers MORE money.

Ask them to come up with viable solutions that don’t cost Lakewood taxpayers MORE money.

Wasting REAL dollars is a lot scarier than “what ifs.”


Comments

Lakewood Trustee Says Abolishing TIF District Will Cost Taxpayers $220,000 — 46 Comments

  1. “Lakewood now has a chance to show how a TIF can be used for the benefit of ALL, when used for the proper purpose and managed properly.”

    “You may have been lead to believe Lakewood taxpayers could be forced to pay $9,000 per student if residential development occurs in the TIF area.

    While possible, it would NEVER happen.”

    Jason, your words demonstrate an impeccable display of absolute arrogance!

    YOU know better than so many others who have failed at TIF’s?

    Perhaps that is why Erin Smith appointed you??

    PERHAPS THAT IS WHY LOU TENORE, PRINCIPLE OF THE SPORTSPLEX HAS CHOSEN TO SECRETLY CONTACT AND COMMUNICATE (Dare I say CONSPIRE) WITH YOU??

  2. The idea of commercial development at 47 and 176 is a future dream.

    Look around, commercial development is in shatters throughout the County.

    Commercial development is collapsing on route 14 in CL, on 47 in Huntley, on 31 and 120 in McHenry, if you need specific examples….look around….buildings are coming down to lessen real estate taxes.

    Lakewood would be very smart to cut their losses and renounce the TIF and the other crackpot ideas that came along with it.

  3. Seriously Paul, Grow up and use your real name!

    You are the ONLY person that knows Lou Tenore called EVERY trustee.

    I have NOT returned his call.

    In fact, I called you to make sure you knew he had left a message for me.

    I will NEVER hide anything!

    I DO NOT support using TIF funds for anything other than infrastructure!

    Infrastructure is the only use that benefits all the taxing bodies making the investment.

    TIF funds should NEVER be used for private purposes.

  4. Maybe I missed it, but why will it cost $220K to dissolve the TIF?

  5. Dear Jason:

    Your reasoning is in error.

    Specifically, you’ve made the classic beginning investor’s mistake called “sunk cost”.

    Allow me to explain.

    “Sunk cost” means money already spent.

    It’s gone.

    Period.

    End of story. I

    t’s money that you spent in the past that is unrelated to what you get in the future

    For example, if you buy a piece of property hoping to sell it at a profit, and you pay property taxes on that piece of property for one year, or five years, or ten years, the property taxes are a “sunk cost”.

    No future buyer cares that you paid property taxes.

    It doesn’t change the market value of the property.

    THAT’s “sunk cost”.

    The TIF District is analogous.

    Let’s assume that someday a REAL developer with REAL money comes along.

    And let’s assume that, at that time, negotiations include developing a TIF district because the developer is demanding some sort of kickback from the taxpayers to locate here — excuse me, I mean “infrastructure is needed to ensure development”.

    And let’s assume that the District then produces $10,000, or $50,000, or $500,000.

    Whether the TIF we have now is dissolved or not will have ZERO effect on that negotiation and that cash flow.

    ZERO!

    Jason, if you want to blame someone for wasting $220,000 on a TIF that has produced nothing, blame your predecessors who SPENT the $220,000.

  6. I agree, commercial development may be a future dream considering the troubles in Illinois.

    However, the TIF already exists and has spent approx. $220,000 to develop engineering plans to bring sewer and water to the site.

    As a Board, we can prevent any additional expenditures within the TIF.

    If development doesn’t come, the TIF will expire on its own in 2022 after repaying most of the engineering costs.

    As a Lakewood trustee, my job is to be a responsible steward of the Lakewood taxpayers money.

    Closing the TIF is a purely political move that will cost Lakewood taxpayers money without any REAL benefit.

  7. Steve,

    I beg to differ.

    A sunk cost is one that has already been spent but can NOT be recovered.

    Leaving the TIF open would allow for the $220,000 cost to be recovered even if only through the natural increase in property value and not new development.

    I am not looking for anyone to blame, I am intending to be a responsible steward of the Lakewood taxpayers money.

    While I may or may not agree with the decisions of those before me, it does not excuse me to make decisions that cost taxpayers UNNECESSARY real dollars.

  8. I just don’t buy it and I’m glad I don’t live in Lakewood.

    I would like to see a study showing the potential commercial development to that section, since there are no large population centers immediately surrounding it.

    Would you build a Wal Mart type store there?

    No, there’s one to the north in Woodstock and one to the south in Huntley.

    And as one poster correctly pointed out, commercial real estate is on the decline, with market shifts to online orders such as Amazon and others.

    Perhaps a light industrial type establishment could go there, but what advantages are there over, say Huntley, which has better freeway access?

    Not to mention the tax levels in this county are stifling and the state continues to be adrift with a budget.

  9. I don’t disagree.

    My goal is to allow for the least expensive way out for the Lakewood taxpayer.

  10. That explains it.

    Lakewood already spent the $220K and recognized it as an expense.

    Now it wants to recover the $220K by continuing to receive the incremental property tax revenue generated by the properties located within the TIF District.

    Unfortunately, given that there has been no new property constructed within the TIF district, all of the TIF’s revenue comes from the increases in EAV of the already existing properties within the TIF.

    It is carving off revenue that would have otherwise been received by every other taxing body (D200, Dorr Twnshp, MCC, McHenry County, Library, etc.).

    In other words, Mr. McMahon would like every taxpayer in the County to fund Lakewood’s ill-conceived decision to create a TIF and then spend $220K on engineering studies.

    Unfortunately, the biggest loser turns out to be D200 given that they make up about 77% of the tax bill for the properties located in this TIF.

    Which means that D200 will pay about $169K of Lakewood’s $220K bill.

    I don’t think the optics look too good by making the children of Woodstock have to pay for Lakewood’s decisions.

  11. Jason:

    You wrote, “the TIF will expire on its own in 2022 after repaying most of the engineering costs.”

    Your source for this revenue is “natural growth” in property values.

    2022 is five years away.

    There’s no big increase this year, so that leaves four years to collect the money. $

    220,000 divided by 4 years is $55,000 per year.

    Now, the property tax rate around here is about 4%.

    That means the District would have to increase in value by roughly $1.4 million in one year to produce that much revenue and by more if the increase takes time.

    Now, excuse my ignorance, but since you are clearly very intimate with this issue, perhaps you’d tell us the base market value of the TIF district and calculate for us the increase necessary to produce that much revenue each year.

    Then perhaps you’d explain how this increase compares with the recent “increases” in property values in this area, and, if the increase is large relative to history, perhaps you’d show us why you believe such an increase is likely.

    I’ve always said I like to base my decisions on facts, so would you please provide the relevant facts to support your contention.

  12. Coffey makes a clear, accurate and principled argument.

    The money’s gone.

    Whether it’s possible to collect money going forward or not (and obviously I doubt that it is), there is the larger ethical question of whether it’s good public policy to beggar other local governments to collect money that would otherwise go to them if the source of the revenue is not causally related to TIF-caused development.

    Jason, I do hope you’ll respond to this point as well.

  13. Jason your deceitful, dishonorable behavior is staggering.

    You met with me for hours, explaining hiow you felt TIF kickbacks to developers were immoral, how you didn’t want to ” stick it to Woodstock ” or Crystal Lake either by detachment /annexation of TIF into CL school districts and out of D200, and how you agreed that a ” repeal and replace ” scenario should be developed in which stakeholders (taxing districts) who stood to gain could share costs of infrastructure only through novel funding mechanisms other than TIF.

    Your written manifesto serves to illustrate how much your word is worth

    (“Lakewood could simply disconnect that area from the TIF …”) to any taxing district fool enough to sign an iGA with Lakewood.

    On my honor, I will devote full time on the other aspect of repeal-and-replace we discussed, which was to serve as an example for responsible municipal behavior:

    Organize a national consumer boycott of any business locating in Lakewood TIF, in conjunction with organized support of competitors located outside.

    You have earned my deepest contempt.

  14. Coffey is right.

    These people are dastards and spent your money already.

    And Jason wants to wash them clean.

  15. Coffey,

    The money spent to date is largely for actual engineering drawings for sewer and water not studies.

    These drawings will have value for years to come.

    When development does eventually make it to 47 and 176, each of the fourteen tax bodies that agreed to invest in the TIF will benefit from the increase in property tax revenue.

    If it was my decision, I would have held off on the TIF until we had a firm development plan.

    However, the TIF currently exists and has spent funds on infrastructure that will eventually benefit all fourteen tax bodies.

    Per the agreement, those taxing bodies are paying for the infrastructure expense.

    Unfortunately the climate in Illinois is such that development may not occur before the TIF expires.

    If that is the only expense paid out of this TIF should it naturally expire, so be it.

  16. Well, now you know, Susan.

    There are very few politicians you can trust.

    They double-talk and deceive.

    No surprise he’s connected to Erin Smith.

    S.Prichard, it will cost WOODSTOCK resident’s $9,000 per student while Lakewood reaps the real estate taxes.

    This was an illegal/Immoral TIF!

  17. Susan,

    Unfortunately you have jumped to conclusions.

    I really wish you would have called me before posting.

    As we discussed, there are other potential options that could be explored in a “repeal and replace” scenario.

    These options should be discussed and agreed to prior to simply dissolving the TIF.

    This is not a repeal and replace scenario.

    This is a purely political move meant to make good on a promise.

    In fact, I specifically asked to have this be a discussion item so we could work on other potential options.

    My request was denied.

  18. I have no strong support for or against the TIF or the people who support it or vow to abolish it.

    My comments are based on my experience as a real estate developer with a portfolio that includes a variety (uses) of TIF projects.

    In my opinion the TIF should not have been created in the first place especially with the motivating project of the SportsPlex was never feasible –

    I sat in the presentation;

    It never had any real (or believable) revenue,

    the proforma line items were unrealistically high or low (whichever was worse),

    the “developers” were lacking in experience and the Village staff was chasing a rainbow, probable for a resume entry, –

    it was amateur hour all around.

    All costs associated with “chasing the rainbow” are gone (as Mr. Wilson said) and any decision made to “recoup” those costs are misguided.

    I don’t like its creation but since the TIF is here, a possible positive outcome could exist beyond the misconceptions.

    Misconceptions that I’m reading here;

    1) A lot of people think TIF development (or development in general) is like pari-mutuel betting – whenever some wins (the developer) someone else loses (the public).

    That has and can happen but does not need to be, there are projects where everybody benefits.

    2) “The Village should use TIF to finance infrastructure” – NO, the Village should not spend any money.

    There are a variety of TIF “reimbursable” expenses, not just infrastructure.

    As the definition of “reimbursable” suggests, money is reimbursed to the developer for TIF eligible expenses.

    The reimbursable financing may or may NOT involve the Village.

    As an example: the present value of a forecasted tax increment can be financed by a third party who holds the TIF reimbursable note (like anything, know what you are negotiating for or against).

    There are also other ways to finance infrastructure, does anyone remember “recapture” agreements”?

    3) “There is no user that would want to be in that location” – I’ve not done any market study but there are uses that I would not summarily dismiss.

    Destination singe use retail and industrial are a few that come to mind.

    The location, one could argue, is in a Lakewood / Woodstock / Crystal Lake / Huntley overlapping market made more attractive by a low physical facility cost since it’s offset with TIF eligible reimbursements.

    I don’t know enough about the school special agreement that relates to this TIF to be able to comment.

    There is a way to manage TIFs poorly at taxpayer expense but also recognize that there is a way to have successful (for the Village) TIF development.

  19. To correct some factual inaccuracies/ omissions of material details in description of TIF above:

    1. Taxing bodies did not agree to this TIF because once TIF ends they benefit from significant tax increases.

    35 years is the presumptive lifespan of a TIF.

    23 years, plus a rubber stamp 12 year extension from Springfield.

    Pamela Althoff and Steve Reick told me that they are obligated to vote in favor of extensions unless taxing bodies object.

    Taxing bodies often do NOT object because they sell themselves cheaply to TIF: payouts in the tens of thousands, even while costing taxpayers millions of continued diverted revenue for 12 more years.
    Woodstock D200 had a lawsuit prepared against Lakewood to protest this improper, ineligible TIF and only declined to litigate in return for Lakewood’s IGA promising to pay $9,000 ( rising with inflation, so higher now) per student per year.

    Taxing bodies do not object to TIF because they will get their tax money anyway.

    They just get it from taxpayers forced to make up the deficit and increase created by the TIF and the amount of all tax increases related to normal inflation over the next 35 years.

    Furthermore what non residential development would be fool enough to situate in a non-TIF area near a TIF?

    The TIF businesses will have a stream of property tax dollars for use in keeping up those properties.

    Others will have to make due with thinly stretched taxpayer dollars allocated to cover the entire non-TIF regional needs.

  20. ….and nobody is safe.

    Where there is a TIF, there will be another TIF.

    What should competitions demand?

    The property taxes ALWAYS rise due to TIFs.

    Property taxes are the main driver of McHenry County ‘s abysmal economic condition.

    Property taxes must rise on all taxpayers in order to pay for the TiF share of:

    1. Increased need for police, fire and rescue, and schools

    2. The inflationary share of the next 35 years which would have been paid by TiF properties ( with or without development).

    The claim that property values rise due to TIF is absurd.

    Given the 4%+ property tax rate in the area of the TIF, and the additional tax burden that will be dumped on the region due to the TIF, there is no rational support for that claim.

  21. Now Lakewood, being many years extremely deficient in low income housing and in violation of Illinois Affordable Housing Act, proposes to deny any landowner who wishes to build low income housing zoning based upon the IGA costing Lakewood taxpayers too much?

    The IGA that was signed in return for dropping well-founded litigation?

    How much will that lawsuit cost?

    Alternatively, Lakewood ‘will simply disconnect that area from the TIF’ to evade financial obligation of an IGA with a school district?

    How much will that lawsuit cost?

  22. Steve,

    To be clear, I am not “for” the TIF.

    I am for RESPONSIBLE use of taxpayer dollars.

    As “RE CEO” stated above, there are other ways to structure funding for development needs.

    This is a discussion I also had with Susan.

    At this point we have the TIF, there is no eminent danger to the public and the costs are not sunk until the TIF is dissolved or expires due to lack of development.

    Whatever the amount recovered by allowing the TIF to run its course over the next 5 years is a positive and should development happen none of the cost would be considered sunk.

    However, with that said, my entire reason for bringing this to the residents attention is this:

    The decision is being rushed simply to fulfill a political promise.

    Simply fulfilling political promises does not make for responsible government and in this case imposes cost on Lakewood taxpayers.

    I requested to postpone the vote on dissolving the TIF until a committee could be formed to explore our options.

    Options I had begun discussing with Susan.

    I was told this would not happen and likely would be called for a vote at the June 13th meeting without discussion.

    I found this frustrating considering we recently postponed a planned truck purchase for a month to ensure we made the right decision.

    Working together we can find solutions.

    Imposing your will simply because you control the Board and need to fulfill a political promise is bad leadership.

    Different band, same music.

  23. To be clear, the only options we discussed were under the presumption of repealing TIF and replacement with different funding mechanisms.

    Furthermore, funding was to be explicitly defined as city water and sewer run to the intersection.

  24. Below is a letter that I hope Paul Serwatka will consider sending to all Lakewood residents:

    Dear Lakewood Resident:

    The letter you received recently from Trustee Jason McMahon is fundamentally dishonest.

    McMahon writes,

    “Dissolving the TIF will place approximately $220,000 worth of TIF expenses on Lakewood residents. This will cost EVERY Lakewood home an average of $150; a 12% INCREASE in our Lakewood property taxes.”

    This is patently, completely and utterly false.

    Your taxes will not increase 12% if the TIF District is dissolved.

    Why?

    Because you already paid for those expense in prior years’ property taxes.

    McMahon then implies that if the TIF District is kept open, it will generate $220,000 in new revenue.

    However, to date the District has produced only nominal amounts of revenue, and none of it related to new development.

    Has McMahon presented any evidence to prove that this situation is suddenly about to change dramatically, that keeping the TIF District open is likely to produce any significant additional revenue in the next few years, much less say $220,000?

    No, he has not.

    Even the modest money the TIF District produces for the Village through what McMahon calls “natural increase” doesn’t help the taxpayers because TIF revenue that comes about without new development is just money the Village government diverts from other local governments that we pay taxes to without changing the overall tax rate.

    We, the taxpayers, don’t come out ahead.

    Sincerely yours,
    Steve Willson

  25. Steve,

    The ad hominem attacks are un-necessary, however, not unexpected as evidenced by the first comment in this thread.

    The undisputed fact is Lakewood taxpayers will responsible for the $220,000 when the TIF is dissolved.

    At that point it will become a sunk cost because it will be unrecoverable without the TIF. This is the decision the current Board is making on June 13th.

    Curiously, you quote my letter when convenient but paraphrase when needed to support your spin.

    The $220,000 is currently a loan from the Village of Lakewood to the TIF.

    Loans are not an expenses until they are unrecoverable.

    The $220,000 is listed as a “receivable” on Lakewood’s financials.

    The dollars were loaned out and are currently recoverable to an extent.

    The are NOT spent.

    Would a bank write off an entire debt simply because you hadn’t made payments as agreed?

    Absolutely not and Lakewood should not either.

    There is absolutely no good reason to rush closing the TIF other than a political promise.

    This has been undisputed.

    Someone trying to put words in my mouth is also an attack with which I am familiar.

    At no point did I imply the TIF would generate $220,000 in new revenue.

    My exact statement was, “after having paid back more of the $220,000 it owes Lakewood”.

    The undisputed fact remains, Lakewood can recover some of its loan by leaving the TIF open.

    How much remains to be seen.

    Neither I, nor anyone else, has a crystal ball.

    In fact, if development did come in the next five years, something none of us can predict, the loan may be completely recoverable.

    Again with that said, I am open to exploring other options as part of repealing and replacing the TIF. However, if we carelessly dissolve it prior to having a replacement we lose credibility to negotiate with the other taxing bodies.

    I would be elated if Paul decided to put out your version of the facts.

    It will show he does not have Lakewood’s best interests at heart.

    He has been sworn to protect Lakewood’s interests and the undisputed fact remains, there is not a good reason to rush closing the TIF without having an alternate in place for anything other than political reasons.

    In fact, avoiding developer calls simply because they are a political hot potato isn’t good leadership either.

    Leaders should be prepared to step into hard places.

  26. Since the Board will be swearing in two new trustees and I will be unable to attend the June 13th meeting, I asked President Serwatka to postpone voting to dissolve the TIF.

    I also asked that we create a committee to explore repealing and replacing the TIF.

    I was told it would not be postponed and that it would likely be called for a vote without discussion anyway.

    President Serwatka railed against this behavior as a trustee in the minority, but now as President he employs this tactic.

    This practice takes away the voice of the people and is anything but transparent.

  27. Anyone that uses the phrase “ad hominem attack” is a progressive moron.

    I am sick to death of you idiots!

  28. Jason the people spoke when they put paul where he is!

    Oh and they spoke with applauds when you finally stopped your plow truck rant a couple of meetings ago!!

  29. And the personal attacks continue…No surprise.

    I shared my knowledge related to the plow truck in an effort to provide information to the Board in hopes of preventing a delay that could cost Lakewood taxpayers money.

    My knowledge was publicly belittled by President Serwatka.

    The vote was then delayed because new Board members were recently sworn in and the plow truck was referred to a private committee who’s members are unknown to the public.

    Yet somehow the decision to cost Lakewood taxpayers $220,000 and attempting to develop alternative revenue sources for Lakewood is not important enough to delay and discuss.

    If this is what Lakewood voted for, good luck.

  30. Jason, first of all, an ad hominem attack says you’re wrong because of who you are rather than because of facts regarding the topic of discussion.

    I didn’t say you were wrong because of who you are.

    I said your letter was dishonest because it contains falsehoods.

    And that is a statement of fact.

    You say taxes will go up 12%.

    This is a falsehood.

    You say the expenses incurred are a loan.

    This is a technicality.

    The economic substance is that the bills have been paid, in the past, by the Village.

    You claim the money can be recovered from the TIF district but you fail to provide any evidence that this is likely to happen and history shows the TIF district is a bust.

    You ignore the fact that TIF revenue that results from “natural increases in property values” — your words — only shift taxes from one government to another without reducing the amount taxpayers pay, meaning any money the Village gets is simply taken from other governments with no benefit to the taxpayers.

  31. Steve? Don’t try to confuse a progressive with facts. They are unable to comprehend. They use their feelings to come to conclusions. They have no ability to learn, and they will try to turn everything you say into a personal attack against them. Kind of like wrestling a pig.

  32. The analysis of whether TIF will benefit Lakewood taxpayers boils down to this (IMO):

    which is more weighty in the valuation of Lakewood real estate:

    sales tax and diverted property tax revenue flowing to the municipality for distribution {to developers/cronies/friends/competitors of enemies} which will lower a (what is it, 10%?) small portion of property tax bill,

    OR,

    90% or more of property tax bill rising, rising, steadily or sharply, as TIF demands more social service provision paid for by non-TIF taxpayers, and inflation inexorably raises all costs, FOR THE NEXT 35 YEARS?

  33. Steve,

    You state the letter is “fundamentally dishonest”.

    This is not a rebuttal to the facts contained in the letter but an attempt to discredit its author.

    My main objective is to slow the process down, create discussion and find ways for Lakewood to responsibly develop the sales tax revenue it so badly needs to offset its growing costs.

    I am not for or against the TIF but I am against dissolving it without an alternative plan.

    I could be for dissolving the TIF, if we had an alternate plan in place.

    The fact is we don’t and it has not even been discussed.

    After re-reading the single, specific sentence you are choosing to base your judgement of the entire letter, I will concede it could have been worded better.

    The fact remains, it will cost Lakewood taxpayers, on average, $150 per household.

    This is, in fact, 12% of the average Lakewood portion of our property tax bill.

    Please accept my apology for mis-wording my statement.

    The expenses incurred are a loan to the TIF.

    This is a fact based upon the terms of the TIF agreement and generally accepted accounting principles (GAAP) through which Lakewood has recorded the expenses.

    This is NOT a technicality.

    Using your analogy, should I expect my mortgage company to write of my mortgage balance because I stop paying as agreed simply because they already paid for the house?

    The TIF has five years to recover expenses before it expires naturally without new development.

    Lakewood recovered a small amount the first year and will in subsequent years.

    How much is irrelevant.

    As a Lakewood trustee, it is my fiduciary duty to make responsible decisions with regard to taxpayer money. Dissolving agreements simply because of political promises and fundamental disagreements with previously made decisions is not leadership.

    You have failed to state why it is important to dissolve the TIF so urgently and without a plan to develop new revenue sources for Lakewood.

    Lakewood does not simply “get” money without benefit to the taxpayers.

    This was an agreement to share expenses entered into between 15 taxing bodies.

    To this point, TIF funds have been spent on infrastructure engineering drawings.

    These drawings will hold value into the future when, irregardless of the TIF, development does finally occur.

    These expense will not need to be recreated and will thus benefit the taxing bodies.

  34. “it will cost Lakewood taxpayers, on average, $150 per household,” Jason McMahon writes.

    I wonder if the tense of the sentence is correct.

    If the bills have been paid, should not the sentence read, “it has cost Lakewood taxpayers, on average, $150 per household”?

  35. There must be more to this, somehow, to warrant Mr. McMahon to be soooo
    consistently vocal.

    Reminds me of how Mr. Zielinski in Grafton reacts.

  36. The tense is correct Cal.

    The $220,000 is currently classified as a loan to the TIF per the agreement and GAAP.

    As long as the TIF exists, the loan exists until it is repaid.

    If the TIF is dissolved by the current Board the loan will cease to exist and will then be considered an expense on the Lakewood taxpayers.

    Your sentence will be correct after they dissolve the TIF.

  37. There is plenty to the story.

    Lakewood’s budget needs new income in the form of property tax (filling subdivisions) and sales tax revenue in order to keep its property tax levy from rising.

    Currently Lakewood’s property tax levy ONLY covers police and fire protection.

    ALL other municipal costs are paid from other revenue sources.

    Lakewood’s fire contract is tied to the EAV and will rise EVERY year.

    Without new revenue sources, Lakewood’s property tax levy will have to rise to cover the increase in fire protection costs.

    My goal is to promote discussions that create new revenue and prevent an increase in Lakewood’s property tax levy.

  38. Cal,

    You are correct.

    The funds were paid to Third Parties for services rendered.

    Mr. McMahon is describing an interfund loan from the General Fund to the TIF Fund to transfer the $220K from one fund to the other.

    The TIF Fund recorded an expense when they made the payment(s).

    Now the TIF Fund has no assets from which to repay the interfund loan, and the only way in which repayment can be made is through the long term collection of property taxes by keeping the TIF District active.

    And those taxes come from every single taxpayer in the County, with some paying more than others.

    This reimbursement scheme will mean that your tax bill will be higher if you pay taxes to one or more of the following taxing bodies:

    McHenry County
    McHenry County Conservation District
    Dorr Township
    Dorr Township Road & Bridge
    McHenry County College
    Rural Woodstock Library
    Lakewood Village
    School District 200

    The D-200 taxpayers will shoulder the vast majority of the burden.

  39. Jason:

    The first statement in my letter is a conclusion based on facts that I then present.

    It’s not a matter of a single sentence, although you continue to say it “will” cost Lakewood taxpayers when, in fact, it already has cost Lakewood taxpayers — past tense, former board, not the current board.

    Further, it is you who used quite hyperbolic language. The action will be “rushed” through.

    “Dissolving the TIF will place approximately $220,000 of TIF expenses on Lakewood residents.”

    “This will cost EVERY Lakewood home an average of $150; a 12% INCREASE in our Lakewood property taxes.”

    “the TIF… will generate new property and sales tax revenue for Lakewood”

    Now you say you “just want to slow the process down”, you want to “create a discussion”, that you’re “not for or against the TIF”.

    And you repeat, “The fact remains, it will cost Lakewood taxpayers, on average, $150 per household.”

    Will — not past tense, “already did”, but “will”, i.e., if the TIF is dissolved it WILL cost taxpayers $220,000, i.e., the TIF WILL produce $220,000.

    I’m sorry, Jason, but you’re talking out of both sides of your mouth and you used very strong language to make your points.

    And you have never responded to my points:

    that the payments have already been made,

    that the loan is a technicality, not the economic substance,

    that you have provided zero evidence the TIF will produce substantial revenue, and

    that increases in TIF revenue that are NOT from development are simply diverting property taxes from one government to another with no benefit to the taxpayers.

    If you don’t like what I’m saying, then refute what I’ve said.

    Until then, I’ll continue to hold to the positions I’ve developed and evidenced, including that you obviously are in favor of the TIF, that what you said about property tax bills going up if the TIF is dissolved is false, that you said the TIF “will” (not might — WILL) generate revenue, and the clear implication that it will be enough to “repay” the $220,000, a position that is completely unsupported and contrary to the historical evidence.

    You can’t have it both ways, Jason.

    You’ve put yourself in this position by what you’ve said, by the way you’ve said it, by the questions you’ve refused to answer, and by contradicting yourself.

  40. Steve,

    You are entitled to your opinion.

    The fact remains it is a loan and will not be an expense until the TIF expires or is dissolved.

    This will be a decision the current Board will make.

    Nothing you have said refutes basic accounting principles.

    I did respond to your statements one by one at 11:59, yet you refuse to address the reason for dissolving the TIF so urgently without ANY planning for the future.

    You continue to make personal accusations and manipulate my words, purporting to extract things from them that were not said, as evidenced above when you state I implied it would be paid back in full.

    Clearly I stated, “after having paid back more of the $220,000” with zero implication it would all be paid back.

    The candidate you backed has put Lakewood in this position with a promise to cut 10% from Lakewood’s levy.

    He also voted to approved a 10 year fire contract tied to the property value EAV, which is now rising every year.

    How do you propose to cut 10% from the levy and absorb the fire protection increases?

    Lakewood needs solutions not campaign promises.

    I’m sure you will get your wish and the TIF will be dissolved.

    The real fun will begin as Lakewood’s costs increase but its revenues do not.

    Then we will see what you and your team are made of.

  41. Jason if you’re not implying that the TIF District will generate $220,000 then all of yourstatements about the cost to the taxpayers of dissolving the district are meaningless.

    Now which position are you taking?

  42. And as for your position about the loan, even the IRS is clear that the substance of the transaction supersedes the form.

    Legally there may be a loan but as a practical matter we the taxpayers aleady paid the bills associated with the TIF.

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