This is from WBEZ so is Chicago-centric; nevertheless it’s a useful way to look at Tax Increment Financing districts and features three TIF experts.

Bonus: Ben Joravsky’s latest, a look at the DePaul Basketball Boondoggle.

The mayor says it will cost at least $55 million to buy land for [a hotel] project and the money will come from the tax increment financing program, intended to eradicate blight in poor neighborhoods.

This block is as close to blight as you’ll find around this neighborhood. The buildings across the street look like they could use a coat or two of paint, and a few windows are boarded up.

In its promotional material for the project, the city depicts this area as a slum. What the city doesn’t show you is that just down the street to the east and south are dozens of high-rises and townhouses that have been built over the last ten or so years—without any TIF handouts.

The rules of “blight” and “but for” are anything they say it is, whether you’re talking Chicago or DeKalb. TIF requires reform. Or our governments do. Or both.

Illinois’ Mercer County lies south of the Quad Cities and comprises part of its metro area.

Perhaps you’ve heard that the county’s treasurer, Mike Bertelsen, has been arrested and charged with stealing at least $13,000 from the county’s 911 Fund, the result of investigations that followed a forensic audit in the county office.

The Illinois Policy Institute has pointed out Mercer County transparency failures that IPI counts as red flags:

  • A lack of online transparency
  • A failure to file annual reports on a timely basis
  • Violations of the Freedom of Information Act (FOIA)
  • Violations of the Open Meetings Act (OMA)
  • I’ve suggested before that failures to turn in Comprehensive Annual Financial Reports (CAFRs) and Tax Increment Financing (TIF) annual reports to the state might signal trouble, as tardiness correlated with financial corruption cases in Alorton and Dixon.

    The violations of OMA and FOIA are either mostly or wholly related to Mercer County’s hideously dysfunctional and incomplete website. FYI: Dixon’s wasn’t much better at the time Rita Crundwell’s crimes were discovered. Read the rest of this entry

    *Update 8/22: City IT director Jeremy Alexander notified me early this morning that an encoding error is the cause of the audio glitch. They expect to have the problem corrected before the end of the day.*

    It has come to my attention that the audio portion for much of the August 12 city council meetings is missing from the recorded video uploaded to the city’s website.

    At this point I don’t know if they will be able to restore the audio, but I do know that two sections of that meeting, the TIF hearing and the Irongate discussion, are important for people to hear, and unfortunately both have been affected by the technical glitch.

    So here they are. Thanks once again to Mark Charvat, who pulled them from his home recorder for us.

    The Chronicle covered the public hearing on the proposed Sycamore Road and South Fourth Street TIF districts last night. The article seems a bit short but I’m gratified to have been quoted.

    Three of us spoke at the hearing: Kerry Mellott, Mac McIntyre and me. If you did not observe Mac’s and Kerry’s contributions, let me assure you they are worth an ear when the city makes the video available.

    Today I offer my prepared remarks* because they represent a somewhat organized body of objections that I haven’t yet shared here.

    Jump to look. Read the rest of this entry

    If one of the indispensable purposes of Tax Increment Financing (TIF) plans is to spur private investment in a given area, the Central Area TIF District is a failure.

    Today I received copies of Central Area annual reports for fiscal years 2011 and 2012 in response to a Freedom of Information Act request meant to follow up on a post from last week.

    To my delight, the city has seen fit to include cumulative data in Section 5 of these latest annual reports, which tracks the amount of public investment and private investment for individual projects. Here is a summary from the FY2012 report:

  • Number of projects, 11/1/1999 through 6/30/2012: 14
  • Public investment undertaken: $12,536,212
  • Private investment undertaken: $7,163
  • This is either a reflection of terrible recordkeeping or a terrible record.

    With the proposed South Fourth TIF plan, the city is promising that it can attract private investment to its south side by engaging in the very same redevelopment activities it practices in the Central Area to no avail. So why believe them? From a historical standpoint, we should expect nothing more than being forced to make 20 more years of debt service payments to the banker overlords for another series of lipstick-on-pig projects.

    DeKalb is considering implementation of two new Tax Increment Financing (TIF) proposals for Sycamore Road and for South Fourth Street.

    The public hearings on these plans are scheduled for August 12.

    The Sycamore Road plan is small, targeted, and clearly ends with tax-paying private businesses. The South Fourth plan speaks vaguely to buying up private property to fix up and market as new commercial, and more specifically to fixing up the local school district’s public property.

    Here’s the main problem with the South Fourth plan: These activities are what the two existing TIFs have been doing for years for very little return on investment. Through its Central Area TIF the city bought, demolished, remediated and prepped at least four downtown parcels and they now all sit as green space. TIF 2, I am convinced, was basically formed for the upkeep of city property such as Barb City Manor and school property such as the former Huntley Middle School.

    While all of these are of course allowable and perhaps even in some cases desirable activities, TIF projects are really supposed to spur private development, create jobs and raise EAV.

    I have a bunch of annual TIF reports stockpiled, including reports from the years FY2005-FY2010 for the Central Area TIF, our largest TIF district that’s been in the business of slush funding since 1986. Section 5 of these reports is for listing project descriptions (e.g., “Van Buer Parking Lot improvements”) and for itemizing public and private investment numbers for each project. Here are the dollars of private money invested in Central Area projects during this time period, in which nearly $10 million in taxpayer money was spent:

    FY2005: $0
    FY2006: $0
    FY2007: $0
    FY2008: $0
    FY2009: $0
    FY2010: $0

    I intend to write more about the South Fourth redevelopment proposal, but am waiting for the clerk’s office to fulfill Freedom of Information Act (FOIA) requests. So, next week I guess.

    DeKalb’s city council met again with DeKalb’s financial consultants, EPI/Crowe, to consider the latter’s latest report and recommendations.

    The most important information to pass on to you is that the consultants told the council, at least twice AND in so many words, that the city will enter another financial crisis within five years if it doesn’t drastically change its operating model.

    Yes, this concern has been a recurring topic at City Barbs since at least the time of the analysis of the Reduction in Force of 2010. Maybe they’ll listen now that they’ve paid someone to tell them these things. We’ll see.

    Key to change, said the consultants, is strategy. Laying off people when you get into financial trouble is not strategic, it’s tactical. Strategic means planning for fulfilling needs 3-5 years out. Tactical is doing whatever it takes to get through the next year. One way is sustainable, the other a grubby little bandage giving temporary relief.

    Bottom line, in my words alone: Getting rid of 30-plus employees is a desperate act borne of failure to recognize changing realities, and those responsible should not be allowed to pretend they are financial geniuses. Read the rest of this entry

    DeKalb’s expenses are outpacing revenues:

    The city will spend at least $30 million from its general fund, a 5.4 percent increase from this fiscal year. The city’s general fund pays for city personnel, equipment, and contractual services.

    The city is projecting $31.1 million in revenue for fiscal 2014, a 4.2 percent increase from this fiscal year. In fiscal 2014, the city is paying $750,000 more on police and fire pensions out of their general fund.

    Today I want to look closely at the revenue increases.

    In dollars, the 4.2% expected net increase equals $1.08 million, which will cover the pension contribution hikes plus a bit more. However, so little of it comes from natural growth that you won’t need to pull out the tarot cards to see a shaky future. Read the rest of this entry

    New Council Gets a Good Start

    City of DeKalb employees and the group Ellwood Historic Neighborhood have hatched a new plan just in time to take up a line item in the FY2014 budget: Buy up multi-family homes in the north 5th Ward, convert them to single-family and resell each property at a loss. In fact:

    “We have worked with a local realtor and contractor to identify a willing seller of a multiunit house in the neighborhood,” said David Castro, a member of the Ellwood House Neighborhood Group, a group of residents who have worked with the city in the past to restore the area.

    Council has put this plan on hold. Good for you, council members! Personally, I would, too. I agree with Ald. Jacobson that DeKalb should not get into the business of property speculation. First and foremost because it is so, so bad at it (see: empty lots downtown). Read the rest of this entry