Bad City Decisions Only Get Worse – Part II


Last week we wrote about how a bad City decision – the sweetheart contract initially given to City Mgr. Jim Hock – continues to propagate more bad decisions, like the even sweeter and longer-lasting employment deal the City Council recently voted to give Hock (“Bad City Decisions Only Get Worse – Part I,” December 22). 

Today’s topic is that bad decision known as the City’s Façade Improvement Program (the “FIP”).  

The FIP was instituted several years ago by a misguided City Council in an ill-conceived attempt to throw a publicly-funded “bone” to existing commercial building owners in consideration of the multi-millions of tax dollars that the City was funneling toward the Uptown TIF district and PRC’s Uptown Redevelopment project.  

Proponents of the FIP – including former mayor Michael Marous, former aldermen Michael Tinaglia and Don Crampton (1st), John Benka (2nd), Sue Bell and Andrea Bateman (3rd), Sue Beaumont and Howard Frimark (4th) and Rex Parker (6th), and current Ald. Rich DiPietro (2nd) – claimed that FIP funds were an “investment” that would pay substantial dividends to Park Ridge taxpayers in the form of higher property taxes from buildings that improved their facades through use of FIP money, and in higher sales taxes from businesses located in those buildings. 

Consequently, the City issued bonds for (a/k/a, borrowed) approximately $800,000 to fund the FIP.  According to Ald. Joe Sweeney (1st) at the December 20, 2010, City Council meeting, $398,000 already has been spent in the TIF district on the buildings that house Country Financial, Fannie May Candies, Hallmark, Hay Caramba, the Original Pancake House, Pines Store for Men & Boys, Raffia, Remax, Starbucks, Solari & Huntington, and others.

But guess what?  No procedure was put in place to measure what kind of return (in the form of increased property taxes and sales taxes) the City would be getting for its FIP money.  And as far as we can tell, to this day City Staff cannot muster more than bare speculation and anecdotes about whether, and how much, the taxpayers have benefitted from that $398,000 of FIP “investment” to date.

That lack of provable benefits wasn’t about to stop Alds. Sweeney, Jim Allegretti (4th) and Tom Carey (6th), however, as they tried their darnedest to give away another $100-150,000 of our money to gussy-up the facades of the Pickwick, the 720 Garden “non-profit center,” and the is-it-ever-going-to-open O’Reilly’s Irish Pub buildings, the last of which is currently owned by a bank following foreclosure.  They did so by seeking an amendment to DiPietro’s renewed motion to suspend the FIP that would exempt those three buildings from the suspension because applications for FIP money had already been made, even though they had not yet been acted upon. 

Fortunately, the absence of façade giveaway supporter Ald. Robert Ryan (5th) from the meeting provided only a 3-2 majority for Allegretti’s exemption amendment.  So, according to Appendix B of the City Council Policy Statements Manual (as brought to the Council’s attention by Ms. Judy Barclay), Mayor Dave Schmidt was allowed to cast a “no” vote, resulting in a tie and the defeat of the exemption amendment.  

Unfortunately, the subsequent 5-0 vote in favor of DiPietro’s overall FIP suspension motion likely has not brought an end to this issue.  Instead, look for Allegretti, Sweeney and/or Carey to seek reconsideration of that vote at the next Council meeting – which they have the right to do under Council procedures because they strategically voted with the majority in favor of the FIP suspension even thought they were against it. 

But the true insidiousness of the Council decision authorizing the FIP year ago was displayed during the December 20 meeting, when O’Reilly’s co-owners Ed Berry and Declan Stapleton, along with their attorney, William Turner, addressed the Council in arguing against suspension of the FIP.

All three of those gentlemen correctly noted that the FIP was an integral element of the grandiose Uptown TIF plan specifically intended to give public money away to private property owners and businesspeople.  They also argued that they went through all the City processes – including Planning & Zoning Commission and Appearance Commission proceedings – with the understanding (fostered by City Staff, of course) that FIP money would be available to them.  Attorney Turner went so far as to invoke the legal concept of “detrimental reliance” and warned that O’Reilly’s financing might fall through without the City’s $50,000 of FIP funding.

That’s the problem with enacting wrong-headed, expensive programs and then letting them stay on the books well after somebody should have realized that they aren’t paying for themselves and are no longer affordable.

As Ald. Frank Wsol noted in addressing the O’Reilly’s spokesmen’s first point: “The TIF is destroying the [City’s] General Fund” because it has already depleted that fund of millions of dollars to cover the debt service on the bonds and other TIF-related expenses that TIF revenues have been unable to cover.  And as Wsol also suggested to the O’Reilly’s folks: “If your project is teetering because of $50,000, maybe it’s not a viable project.”

That’s exactly correct on both counts, as was Ald. Wsol’s point that the City is being asked to continue these giveaways when it already has effectively defaulted on a couple hundred thousand dollars worth of TIF-related payments to School Districts 64 and 207 because the City didn’t have the money to pay them this year – making any more giveaways to private businesses and property owners even more irresponsible.

We here at PublicWatchdog believe that the City should be “friendly” to business.  But that friendliness should take the form of clear and understandable codes and regulations, interpreted and applied predictably, consistently, diligently, expeditiously and decisively by competent City Staff and City commission members.

Paying what amounts to bribes for businesses to locate or stay in Park Ridge, on the other hand, is just plain bad public policy.  Not only does it invite the blackmail-like process of real or imaginary bidding wars with other communities, but it demeans Park Ridge by effectively conceding that our community can’t compete for decent businesses without such bribes.

In his comments to the Council, Mr. Berry spoke of O’Reilly’s generating 40 jobs for local residents, $25,000 of annual sales tax and $40,000 of property taxes from that currently shuttered and foreclosed site.  His partner, Mr. Stapleton, praised the FIP as a means by which the City is “co-investing” in local businesses. 

Frankly, we don’t think the City, as a matter of public policy, should be “co-investing” with any private business.  There are far too many downsides to such “investments” and not enough upsides.  Just look at the City’s purported “partnership” with PRC on the Uptown Redevelopment project.

But if the City chooses to do so, it should not provide up-front money.  Instead, it should provide back-end incentives…like, for example, some form of tax abatement, but only after these businesses can prove that they actually have brought substantial undisputed and quantifiable financial benefits to the City.

The current City Council and its predecessors since 2002 weren’t able to figure that out.  Here’s hoping a new Council can do better.

To read or post comments, click on title.

8 comments so far

i’ve heard that that building is undergoing environmental tests and everything is on hold because of that… supposedly there used to be a dry cleaning business there and there was concern that fluid leaked into the soil. This is a rumor but would make sense as to why nothing has been done yet. maybe mr. berry could confirm/deny.

Thanks for the thought provoking two part post. Indeed we need new ways of looking at things; not just from the council though, we need a much sharper group of administrators and staffers who will give a rat’s ass about the direction ofd the city. Something that seems sorely lacking from too many of the current bunch. April/May can’t come soon enough.

“No procedure was put in place to measure what kind of return (in the form of increased property taxes and sales taxes) the City would be getting for its FIP money”.

While I agree with this statement, I cannot imagine what proceedure would ever exist that could even give a semi-accurate tracking that could be verifiably traced to the FIP money. There are so mnany factors that make business (and sales tax money) go up or down that to attach it to FIP would be impossible.

One of the newer applicants has had me scratching my head ever since I moved to town – the Pickwick. I can only guess that this means not only the movie theater but the resturant as well. Based on the times that I have been there, I cannot believe that they make enough to pay the taxes on the building. There must be a special deal there. Everytime I have been there with we are one of only a handful of people seeing the movie, even in Theater 1. Attendence at the Pickwick is due to better technologies at newer facilities, not the facade.

EDITOR’S NOTE: Of course there are a variety of factors that affect sales tax revenue, but it does not appear that the City has even attempted to ascertain whether sales tax revenue actually increased or decreased – irrespective of the reason – following City-funded facade improvements. Nor is there any evidence that the City has embarked on any attempt to determine whether the property taxes on facade-improved building increased following the facade improvement; and, if so, did it increase by a greater proportion than the increases for buildings with unimproved facades.

The bottom line is that the City didn’t care about such metrics when it passed this ridiculous giveaway program a few years ago, and it doesn’t care about them now. Simply giving away the taxpayers’ money is all that the FIP ever has been about, just like that is all that the community group giveaways ever have been about. Getting measurable value in return is not even on the radar of the spendthrifts sitting around The Horseshoe.

If you can’t measure it you can’t manage it. Period.

WIU @ 5:51 pm:

That’s right, which shows that city government really doesn’t want to “manage” the FIP, or (as PubDog pointed out in its “Editor’s Note”) the community group giveaways.

Mayor Schmidt has done a pretty darn good job so far, especially for being surrounded by a bunch of not very bright big-spenders . Here’s hoping he gets a few aldermen who share his fiscal conservative views come April. Until then, I hope he vetoes every stupid and wasteful thing those dopes do.

We desperately need leaders at every level who believe that more government programs, spending and debt are not the answer to the problems we face. Schmidt, Wsol and DiPietro are the only people on the Council who act like they understand that, although DiPietro screwed up when he decided to donate my tax money to his three favorite community groups for no good reason.

PubDog, it’s unfair, untrue and downright silly to characterize elected officials’ decision to allocate funds to projects as being about “simply giving away taxpayers’ money.” Why would they do that? Do you think Center of Concern or Meals on Wheels is funnelling massive payola to the aldermen? You and I may not agree that the benefit from a particular allocation is worth the cost, but except where pay-for-play is involved, even the worst pol makes the decision with the expectation that some good will come of it for the taxpayer. Even the worst of them is not there just to give away taxpayer monies. You lose credibility with your fans when you say that.

Do we need staff (including management, consultants and ANYBODY we pay!) to be much more rigorous and careful in the assessments they provide on issues put forward for vote? Absolutely. Do we need elected officials to be much more rigorous in grilling the paid folks about their assessments prior to a vote? Of course. But that would require a culture change in which those who complain about bad service aren’t pilloried by their peers, but are admired, instead.

EDITOR’S NOTE: We have never even suggested that any of those private organizations have funneled “payola” to our public officials. To the contrary, what we have observed over the years is that certain aldermen (including some on the current Council and many on past Councils) display no internal public policy compassses, no sense of uniformity and consistency, no sense of cause and effect accountability, and an outright disrespect for other people’s money. So they throw arbitrary amounts of that money at private organizations like Center of Concern, Meals on Wheels, etc. – while demanding no accountability in return – rather than say “No” to the folks who run those organizations and to the aldermen’s friends and acquaintances in the community who favor those organizations.

We challenge you and those organizations to provide documentable, objective data concerning the exact monetary “benefit” Park Ridge residents receive for the money the City donates to them, ostensibly on behalf of its residents/taxpayers. As we’ve said repeatedly, if the services those organizations provide are essential to the operation of this City and/or the welfare of its residents, then let the City and those organizations make those findings pursuant to City Policy No. 6, and contract with those organizations for specific services at specific prices.

Finally, if you haven’t noticed by now, we don’t write and publish for any “fans.” We write and publish what we believe in, with no concern for “fans” or “foes” of any race, color, creed, station, or other characteristic.

One of your greatest paragraphs, ever:

“We here at PublicWatchdog believe that the City should be “friendly” to business. But that friendliness should take the form of clear and understandable codes and regulations, interpreted and applied predictably, consistently, diligently, expeditiously and decisively by competent City Staff and City commission members.”

EDITOR’S NOTE: Thanks, 5th, but we thought we were just stating the obvious.

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