Last week’s local papers published a guest essay by Ald. Dan Knight (5th), the chairman of the Park Ridge City Council’s Finance Committee, about the financial problems and disappointments presented by the Uptown TIF.
Readers who didn’t pay attention to the TIF process when it was being created and implemented by past mayors (Ron Wietecha and Mike Marous) and City Councils (from 2003 through 2006) can benefit from the short history and explanation of the TIF presented by Knight. But the essence of that essay is whether the City should stop abating the property taxes that otherwise would be levied specifically to pay the TIF-related General Obligation (“G.O.”) bonds.
Until now, the City has abated those property taxes related to servicing the TIF-related G.O. bonds, which are backed by the City’s full faith and credit (i.e., all of its assets and taxing ability).
This is significant in two respects, the first being transparency.
According to Knight’s essay and the front page of the Agenda Cover Memorandum by the City’s Acting Finance Director, Kent Oliven, the City’s customary abatement of those taxes that otherwise would be specifically levied by the County to cover the annual debt service on the City’s four TIF-related bond issues (Series 2004A, 2005A, 2006A and 2006B) means that those expenditures are “rolled into the City of Park Ridge line on a property tax bill” while TIF-related levies would “have their own line” on that bill.
We’re not sure why that has been done for all these years, but one explanation that comes readily to mind is that those mayors and aldermen responsible for the TIF decided that the luster of their grand Uptown project might dull a bit in the public’s eye if the million-dollar-a-year debt service cost kept popping up as a separate line item on each semi-annual tax bill. Such an explanation seems to be born out (based on admittedly anecdotal evidence) whenever ordinary citizens discuss the TIF and the Uptown redevelopment it funded.
Ask residents if they like the development itself, and most respond with an unqualified (and often smiling) “yes.” But inform them that the TIF has been running up $1 million annual deficits totaling approximately $6 million so far, which the City’s General Fund has been covering, and the response usually changes to an irritated “What?” And follow that up with the expert projections now suggesting that the TIF will produce a total deficit of more than $20 million over its lifetime instead of the $40 million windfall profit the TIF-addled mayors and aldermen were touting less than a decade ago, and the average listener will go from the irritated “What?” to an incredulous “WTF”?!?!
And all that’s without telling them how all those TIF deficits have led to a downgrade of the City’s bond rating.
The second significant aspect of the TIF-related tax abatement involves how that abatement has resulted in the TIF’s looting of the General Fund by the approximately $6 million referenced above.
So the City Council is going to take up the abatement issue this November and December as part of its 2014-15 budget process. The Mayor and the Aldermen will discuss whether to raise the City’s tax levy to cover all or part of the debt service cost of those TIF-related G.O. bonds, thereby reducing or eliminating the continued erosion of the General Fund. Oliven suggests that doing so would send “a signal that the City is aware of its debt obligations and is willing and able to raise taxes, if necessary, to meet those obligations.”
This is what it’s come to: further reduce expenses, or raise revenues through a higher-than-usual tax increase.
We’d love to see former mayors Wietecha and Marous, former city manager Tim Schuenke and all those TIF-loving aldermen return to take a bow for those results of their grand TIF plan, and maybe share with the current Council and City Staff all the reasons why the TIF garnered their enthusiastic support. But we’re guessing that isn’t likely to happen. The ones we’ve talked to recently seem to have partial Alzheimers (Half-heimers?) when it comes to the TIF’s financing and projections.
Which proves the old adage that success has many fathers, but failure is an orphan.
Which the current Mayor and Council have been forced to adopt.
To read or post comments, click on title.
7 comments so far
I don’t understand why these bond issues are not refinanced at lower interest rates? Or, why doesn’t the city try and sell some of its land not in use and retire some of the principal on these bonds? Or why doesn’t the city have a one time tax to all residents for the purposes of paying down the principal on the bonds?
There are so many creative ways the city can solve its TIF problems and not hurt the residents long term.
EDITOR’S NOTE: The residents have already been hurt – short and long term – by the $6 million the TIF-related G.O. bonds have already sucked out of City coffers. Can the Council count on your showing up at its meetings in November and December and sharing all your creative ways to solve the TIF problems?
First, a thank you goes to Dan Knight who brings the issue TO the taxpayers. It’s not often elected officials go to the public with tough issues.
Here are my questions about a new tax:
—Additional “temporary” taxes are almost always made permanent or augmented to stay in a permanent way. How can this mayor/council protect the taxpayers from this being a permanent spend? If you put a $million or so back in the general fund, that shouldn’t be a green light to start spending.
—Is there a way to a published accounting so the taxpayers can track on the progress of this exact expense pay down?
—There is additional sales tax revenue coming in from this development. The final formula of cost should have this additional revenue subtracted from the total that is lost. It may be small, but actual accounting should be used if we are going to have an extra tax. Otherwise…we are just pay an extra tax.
—Would developing other properties help ease the cost to taxpayers?
—In last years report, refinancing the debt was a strong option. Why wouldn’t that coincide with a new tax?
Who on earth didn’t see this coming?? Of course there will be a tax increase. Why?? Because what ever you think of the Mayor and Alderman Knight, they are grown ups and they can’t simply take this from a pension contribution (sound familiar?)
Am I the only one who sees the irony in Alderman Knight’s estimated tax increase being almost identical to the increase for the Park land?
If the Mayor and Council really wants to do this right they should get a website and have a party at a bar with a band to drum up support!!
EDITOR’S NOTE: Not sure we follow you, anon: “can’t simply take this from a pension contribution”? “[E]stimated tax increase being almost identical to the increase for the Park land”?
But as to your last point, we assume Commissioner Thillens could give the Mayor and the Council some advice?
PD:
Near the end of the second column, Knight references a $65-75 increase on a 10K tax bill. I believe the number for the park land was $72. Pretty damn close. The pension reference was a jab at our state officials. For decades they took money that should have gone to the pension commitment and spent it on god knows what. At least my third point cam through crystal clear!
Since Park Ridge never really was a depressed and desperate, TIF-needing community, in 25 years the now-maligned Uptown development will be treasured as a handsome highlight of the City, and in 50 years it will be adored as is the Pickwick building. Hopefully along the way there will be retail sales tax revenue. But not unless the City can levy some kind of penalty on the property owner. Now, he can leave space empty forever if he feels marketing costs would outweigh paying the real estate tax himself. He can set rental rates so high nobody can afford it, ignoring the fact that “market rate” is what people WILL pay; not what they won’t pay. He can ask for, and get, variances to the deal that let him stick another no-sales-tax-providing financial service op in there. That needs to change. But yeah, real accounting would be nice, too. Refinancing the debt would be a no-brainer. Best of all would be NEVER EVER AGAIN asking for more green space and more retail — as the City Councils you revile did repeatedly — and settling for hogwash from developers who knew all along they wanted mostly outright condo sales, not mall management. Of course, that would mean not having the majority of elected officials NOT allowing hornswoggled and over-their-skis staff “professionals” make all the decisions. We needed — and need — to demand real, “why-the-hell-not?” answers from vendors, developers, and the staff who kowtow to them.
EDITOR’S NOTE: “As adored as is the Pickwick building”? We think not. And for the next 16 years the City’s taxpayers will be dropping $16 million or so into the Uptown abyss.
Most of the other things you suggest may be either factually incorrect or illegal, except for the voters never again electing boneheaded City officials who aren’t bright enough or savvy enough to not get hornswoggled by developers. That probably won’t be achieved, but it’s a hope worth having.
Anon 10.30
What do you mean by “Since PR was never TIF needing in 25 years?”
Several separate thoughts are expressed in this compound, complex sentence — that’s why a comma is in there. First thought: Park Ridge was never a blighted TIF-needing community. Second thought: In 25 years, the Uptown development project, which has already won significant awards for its good looks and how well it fits into the community, will be valued by most residents. Third thought: it will be like the Pickwick Theater in 50 years; an architectural treasure.
EDITOR’S NOTE: First: true. Second: those “significant awards” were from fluff and stroke pro-development organizations, and the project will be “valued” only after it stops sucking $1 million out of the City treasury each year. Third: while we find it reasonably attractive, it’s about as much an “architectural treasure” as an Arby’s.
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