This is a continuation of Woodstock’s Susan Handelsman’s analysis of the proposed Woodstock Tax Increment Financing District.

WHY TAXING BODIES AND CITIZENS MUST OBJECT TO WOODSTOCK TIF 2

10. TIF will guarantee a higher property tax rate for Woodstock D200 taxpayers for 35 years, causing NON-TIF property values to sink.

Tax rate= levy divided by taxable EAV. The whole point of TIF is to EXCLUDE TIF EAV from the ‘TAXABLE’ EAV designation.

Woodstock pitches its TIF 2 on the premise that Nobody will want to develop NON-TIF properties. Doesn’t that make it inevitable that existing NON-TIF properties’ EAV which have to fight headwinds of higher nominal taxes with no hope of any contributory development to share the growing tax burden will sink in value?

Sinking taxable EAV will cause a crisis in funding for at least one PTELL-limited taxing district: Woodstock D200. Current EAV of $800 million will not be able to support D200 12 year documented spending and borrowing habits unless there is rampant inflation of existing non-TIF home values, without raising p-tax rates to a rate far exceeding current 4%+ p-tax rates. (American average property tax rate is 1.15%; Chicago is around 2.2%).

11. TIF Plan indicates displacing some individual homeowners through eminent domain for benefit of personal profit of private developers as allowed by law (Kelo vs. New London). 

This just seems morally wrong. Especially if Woodstock has been unwilling to take zero-assessed vacant land zoned commercial/industrial under eminent domain at fair-market value, to gift to any willing and

12. **Additional issue** By including Walmart in TIF, will portions of future inflationary increase of Walmart sales tax revenue be diverted to the TIF rather than naturally accruing to Woodstock City taxation needs?****

If Walmart is in the TIF it is eligible to receive TIF funding. It is also bound by TIF law to contribute some or all incremental taxes to TIF (rather than to taxing bodies…therefore the ensuing 35 years of any related inflationary taxes must be paid by NON-TIF and frozen TIF EAV taxable properties).

What is Woodstock’s projection on TIF-related sales tax increment? How much will be diverted to TIF from inflationary sales taxes? If new TIF sales tax revenue is projected due to new TIF residents, HOW MANY residents, and what is the model of projected sales tax each new resident will produce?

Woodstock has not QUANTIFIED the amount of new sales tax generation it implies TIF will produce, it has not measured the amount which will be allowed by law to contribute to Woodstock City NON-TIF upkeep over an inflationary 35 years, and it has not quantified the projected cost of the new social service provision that the law demands must be provided to new residents required to produce new sales tax revenue (which is subject to TIF diversion).

Subtracting the cost of ONLY projected new sales tax revenue which MAY NOT REQUIRED TO BE DIVERTED TO TIF from the massive costs of inflationary tax revenue diversion and the NEW COSTS of social service provision MADE NECESSARY BY TIF will give the sum annual total NEW COST BURDEN of TIF on non-TIF property owners within Woodstock, Woodstock D200, and McHenry County.

13. **Additional Issue** Buyers of new homes in Woodstock have reported being misled about how high their property taxes will be when the full local property tax rate ~4% of total home value kicks in after 3 years.

Would developers agree to print bold announcements on sales contracts, and require homebuyers to bring affidavits from mortgage lenders stating that the prospective purchaser has received explanation by lender that the property tax rate paid on their first year of new home purchase is a fraction of the final tax rate amount 4 years hence, and that their monthly mortgage payments will rise substantially as a result?

The cycle in Woodstock has been that new homes immediately fall in value as the shockingly high property tax rates fully vest. This will affect TIF projections based upon new home value assumptions.

*PINs, for a few examples: 13-05-156-001 sold 12-18-17 for $542,500 but has been assessed at $47,329 EAV ($141987 full fair market value).

13-16-126-004, 009, 010,011,012,013,015, 016, 017, 018, 019 are large vacant parcels near American Community Bank which appear to not be farmed, and are zoned commercial and industrial but have been assessed at essentially zero. Statutory interpretations in dispute:

UPDATE: *Assessor* has informed: the $542,500 sale also included a property in Hebron Township. The price of $542,500 was for two properties, not just one. Claims “Developers’ parcels” assessed at $42 are per Statutory “Developer’s Exemption” (35 ILCS 200/10-30) . (Still questioning these assessments of vacant land next to American Community Bank and Walmart). (Still 350 PINs in TIF to check on Athena.)

Here are Statute sections and Illinois publication sections referred by Assessor, still in dispute as to interpretation:  (35 ILCS 200/10-30)

“A recent Illinois Appellate Court decision says that land previously assessed under the farmland assessment law should be continued to be assessed as farmland based on the soils productivity index until the property no longer qualifies for the developers exemption.”

(and also)

“(b) Except as provided in subsection (c) of this Section, the assessed valuation of property so platted and subdivided shall be determined each year based on the estimated price the property would bring at a fair voluntary sale for use by the buyer for the same purposes for which the property was used when last assessed prior to its platting.”

= = = = =
**Payment toward Existing debt for new schools built to service demand by new residents is not an allowable use of TIF revenues. By Statute the TIF is limited to paying: “no more than 25% of the total amount of property tax increment revenue produced by those housing units that have received tax increment finance assistance under this Act;”.

Willow Brooke apartments, 320 units, is assessed at $4,222,542 EAV, indicating a $13195 per-unit EAV. At 12% of EAV tax rate the TIF would be allowed to pay: .25(.12 x $13195) = $396 per new residential unit to D200. At .65 students per unit, the COST per year would start at ($9000 x .65) = $5850.

Contrast $396 to the current amount per student per year levied by Woodstock D200: $9000.

***Village/CityEAVs 2017:

Woodstock $512,311,769

Algonquin  $711,819,522

Crystal Lake  $1,174,356,045

Harvard  $121,404,659

Huntley  $624,836,932

Marengo  $134,067,864

McHenry  $691,816,236

TIF “Rate setting” EAVs (exclude non-taxable incremental increases) 2017:

Woodstock TIF 2 $29,079,292

Woodstock TIF 1  $11,934,003

Algonquin  $19,163,186

Crystal Lake VA Sta TIF  $8,158,971

Crystal Lake Main St. TIF  $1,753,546

Crystal Lake Vulcan TIF $3,974,403

Harvard  $4,846,837

Harvard 2004 TIF  $1,632,350

Huntley  $12,951,733

Marengo Downtown TIF  $5,480,165

Marengo Eastern Corridor TIF $634,562

McHenry  $11,275,995

TIF EAV as a percentage of total Village/City EAV  2017:

Woodstock TIF 1&2:  8%*         TIF 2:  5.68%

Algonquin                                             2.69%

Crystal Lake (3 TIFs)                            1.18%

Harvard  (2 TIFs)                                   5,33%

Huntley                                                  2.07%

Marengo  (2 TIFs)                                 4.56%

McHenry                                               1.63%

**** ILCS (sections related to TIF Sales Tax Increments)

65 ILCS 5/11-74.4-3(i)
65 ILCS 5/11-74.4-3.5(d)
65 ILCS 5/11-74.4-8
65 ILCS 5/11-74.4-8a

Assuming BLS Household Expenditures Survey 2017 ~23% of net household income is spent on sales-taxable goods and services, and assuming Woodstock median household income rises to $60,000:

.23 x $60,000 = $13,800 per household will be spent. This suggests that each household ‘may’ generate new sales taxes to Woodstock of $138 annually per 1% of total sales tax captured.

TIF seems to DIVERT a portion of naturally occurring inflationary sales tax (‘sales tax increment’)?

If we assume that 1000 new households are added to Woodstock through TIF

(generating 635 new students requiring $9000 each per year property tax cost billed to non-TIF taxpayers= $5.7 million annually , rising with inflation).

Sales tax: There would be $138,000 x 2 if Woodstock additional 1% sales tax levy is in place= $276000, BUT, this amount would be diminished by givebacks or TIF diversions: Are sales taxes being abated, as they are to Kohl’s, Bull Valley Ford and Vroom Vroom by Woodstock? Are TIF incremental sales taxes diverted to TIF rather than to Woodstock Taxpayers’ benefit?

How much are the NEW property taxes of schools, fire&rescue, and other taxing bodies which are required by law to provide social services to ALL residents and businesses in this County RAISED in order to facilitate the modest Sales tax increase implied by Woodstock to be regenerated by this TIF?

12.  **Additional issue** By including Walmart in TIF, will portions of future inflationary increase of Walmart sales tax revenue be diverted to the TIF rather than naturally accruing to Woodstock City taxation needs?****

If Walmart is in the TIF it is eligible to receive TIF funding. It is also bound by TIF law to contribute some or all incremental taxes to TIF (rather than to taxing bodies…therefore the ensuing 35 years of any related inflationary taxes must be paid by NON-TIF and frozen TIF EAV taxable properties).

What is Woodstock’s projection on TIF-related sales tax increment? How much will be diverted to TIF from inflationary sales taxes?  If new TIF sales tax revenue is projected due to new TIF residents, HOW MANY residents, and what is the model of projected sales tax each new resident will produce?

Woodstock has not QUANTIFIED the amount of new sales tax generation it implies TIF will produce, it has not measured the amount which will be allowed by law to contribute to Woodstock City NON-TIF upkeep over an inflationary 35 years, and it has not quantified the projected cost of the new social service provision that the law demands must be provided to new residents required to produce new sales tax revenue (which is subject to TIF diversion).

Subtracting the cost of ONLY projected new sales tax revenue which MAY NOT REQUIRED TO BE DIVERTED TO TIF from the massive costs of inflationary tax revenue diversion and the NEW COSTS of social service provision MADE NECESSARY BY TIF will give the sum annual total NEW COST BURDEN of TIF on non-TIF property owners within Woodstock, Woodstock D200, and McHenry County.

13.  **Additional Issue** Buyers of new homes in Woodstock have reported being misled about how high their property taxes will be when the full local property tax rate ~4% of total home value kicks in after 3 years.

Would developers agree to print bold announcements on sales contracts, and require homebuyers to bring affidavits from mortgage lenders stating that the prospective purchaser has received explanation  by lender that the property tax rate  paid on their first year of new home purchase is a fraction of the final tax rate amount 4 years hence, and that their monthly mortgage payments will rise substantially as a result?

The cycle in Woodstock has been that new homes immediately fall in value as the shockingly high property tax rates fully vest. This will affect TIF projections based upon new home value assumptions.

 ****  ILCS (sections related to TIF Sales Tax Increments)

65 ILCS 5/11-74.4-3(i)
65 ILCS 5/11-74.4-3.5(d)
65 ILCS 5/11-74.4-8
65 ILCS 5/11-74.4-8a

Assuming BLS Household Expenditures Survey 2017 ~23% of net household income is spent on sales-taxable goods and services, and assuming Woodstock median household income rises to $60,000:

.23 x $60,000 = $13,800 per household will be spent. This suggests that each household ‘may’  generate new sales taxes to Woodstock of $138 annually per 1% of total sales tax captured.

TIF seems to DIVERT a portion of naturally occurring inflationary sales tax (‘sales tax increment’)?

 If we assume that 1000 new households are added to Woodstock through TIF

 (generating 635 new students requiring $9000 each per year property tax cost billed to non-TIF taxpayers= $5.7 million annually , rising with inflation).

Sales tax: There would be $138,000 x 2 if Woodstock additional 1% sales tax levy is in place= $276000, BUT, this amount would be diminished by givebacks or TIF diversions: Are sales taxes being abated, as they are to Kohl’s, Bull Valley Ford and Vroom Vroom by Woodstock? Are TIF incremental sales taxes diverted to TIF rather than to Woodstock Taxpayers’ benefit?

How much are the NEW property taxes of schools, fire&rescue, and other taxing bodies which are required by law to provide social services to ALL residents and businesses in this County  RAISED in order to facilitate the modest Sales tax increase implied by Woodstock to be regenerated by this TIF?