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

    DeKalb’s Hiring Spree

    The City of DeKalb got rid of 30+ employees at the beginning of FY2011 in order to balance its budget. There followed a year of quiet, but now we’re in the midst of a hiring spree.

    YoY Comparison of
    Full time Equivalent
    Employees (FTEs)
    FY2012FY2013FY2014+/- Over
    FY2012
    Administration17.52022.25*+4.75*
    Police
    80.0786.0787.57+7.5
    Fire
    545358+4
    Public Works434444+1

    Here is what it has done to personnel expenses.

    Selected
    Personnel
    Expenditures
    FY2012FY2013FY2014+/- Over
    FY2012
    Salaries12,614,05413,301,20714,163,263+1,549,209
    Health Ins3,320,7253,746,7403,810,939+490,214
    Pensions/FICA4,466,7794,199,3244,870,100+403,317

    And here’s what the FY2014 budget narrative (PDF p. 29) says about the increases:

    Total Personnel Services reflect an increase of 4.5% percent over FY2013. Most of this increase is attributable to a 15% percent increase in pension costs. Wages reflect increases based on collective bargaining agreements. Our insurance consultant informed us in March that the City’s health insurance premium will increase by 4.5% percent[.]

    The latest pension cost increase is distressing, but in terms of dollars it is neither the only source nor the primary source of rising personnel costs, which make up some 83% of the General Fund budget.

    So we’re looking at these expenditures going up $2.4 million over a two-year period. However, personnel expenses as a whole are expected to rise only about $1 million. In my opinion, this has given council and others a false sense of security that our revenues are naturally growing to cover the ongoing, rising expenses — so let’s try to tug the curtain away. Read the rest of this entry

    The DeKalb Chamber of Commerce wants a new annual allocation from the city.

    The DeKalb Chamber of Commerce is requesting $45,000 from the city to create an event coordinator position to take over the events that Re:New DeKalb has run for years…Re:New DeKalb will undergo a fundamental shift later this year, said Frank Roberts, the president of the organization’s executive board. He said the organization will broaden its focus to include economic development in the entire city, public safety, and creating a marketing brand for DeKalb.

    First of all, that’s some serious mission creep they’ve got there. Secondly, the Chamber already gets $50,0000 per year from DeKalb’s Economic Development Fund for marketing and tourism.

    Speaking of the Econ Fund:

    The money would come from the city’s economic development fund, which is funded by the city’s hotel/motel tax. Biernacki said the city expects to see a boost in this fund with the new Hampton Inn and Suites being built at the corner of South Annie Glidden Road and Taylor Street.

    No, I’m thinking the money probably wouldn’t come from that fund. Reason(s): the Econ Fund always a) gets a transfusion from the General Fund, and/or b) runs in the red. Read the rest of this entry

    Library ShelvesOnce again let me express deep, deep skepticism that DeKalb Public Library will actually raise the stated goal of $6 million in private donations to contribute to its expansion costs.

    Witness the latest step toward putting it on the taxpayers.

    In order to meet a looming June 30 deadline, the DeKalb Public Library will borrow $6 million from a private bank as a part of its fundraising strategy for its planned expansion.

    How does that even work? If DKPL can just walk into a bank and get a loan of millions, why is it asking the City of DeKalb for help?

    Just as importantly, is there anyone who believes DKPL will honestly commit to fundraising once a bank loan is in hand?

    If the library board were serious about raising funds from anybody besides Mr. & Ms. Taxpayer, it would have launched a capital campaign well before last month and passed the hat ’round its own table. As of December it hadn’t identified even one major donor and that’s got to be the case today, else they wouldn’t still be looking at borrowing the entire $6 mil.

    I truly believe DKPL’s “fundraising strategy” is to use public money, period. Only the city council can change that course and it can start by applying the brakes Monday.