Will Uptown TIF Tiff Bite Taxpayers In Wallets…Twice?


We’ve been pointing out for years how it’s the taxpayers – present and future – who pay the price for all the incompetence, waste, graft, fraud and corruption to be found in most of the almost 7,000 units of government in Illinois.

Unfortunately, Illinois ranks No. 1 among the 50 United States when it comes to positively rank government, so it’s more than a little annoying to realize that Illinois taxpayers are figuratively pouring truckloads of their tax dollars down various governmental rat holes.  That being the case, it’s even more annoying when local governmental bodies botch their respective jobs so thoroughly that they end up in litigation with each other.

Can you say “taxpayers paying legal bills for both sides of the same dispute”?

That might be what we’ll soon be looking at here in Park Ridge, judging by the stories in last week’s Park Ridge Herald-Advocate (“District 64 to Park Ridge: Pay money owed or go to court,” May 12), the Park Ridge Journal (“City Contests TIF Funds Owed To D64,” May 14) and The Bugle (“Park Ridge-Niles School District 64 demands money from city of Park Ridge,” May 12) about Park Ridge-Niles School District 64 threatening to sue the City of Park Ridge over an approximately $600,000 payment allegedly owed D-64 this year.

And annoyance becomes infuriation upon the realization that this dispute arises from that multi-million dollar albatross dangling around the City’s neck.

Yes, of course we mean the Uptown TIF.

As described in City Finance Director Kent Oliven’s April 11, 2014 Memorandum, the TIF’s originally-projected property tax revenue of $73 million has now been cut by almost 50% (47.5%, to be precise) because of the County’s decision to reduce assessment levels in 2009, and because property values have declined almost seven percent more in the TIF district than the 20% decline in the rest of the City.

As if that news isn’t bad enough, we’re now being told that the TIF-related bonds were “back-end loaded,” meaning that the annual TIF debt service payments will actually increase by an average of over $400,000 a year in 6 of the next 8 years, peaking in a debt service payment of $4.875 million in FY2022.

Those ill-conceived Uptown TIF bond obligations made over a decade ago already have caused the City’s debt rating to be downgraded, raising the City’s borrowing costs even though Moody’s has expressly recognized that current City management is responsibly biting the bullet “is implementing the necessary policies to balance TIF operations and rebuild General Fund liquidity” – through major expense cuts, layoffs, and tax and fee increases.

Needless to say, the City doesn’t have the luxury of wasting money – whether by overpayments to D-64 under the TIF-related September 8, 2003 intergovernmental agreement (a/k/a, “The Bribe Agreement”) or by litigation.  And we can’t imagine D-64 has a spare hundred grand laying around to litigate with the City.

But according to an April 7, 2014 letter from City Mgr. Shawn Hamilton to D-64 Supt. Philip Bender, D-64 has been improperly charging the City for “new students” in the TIF district whose addresses are not in the TIF district and, therefore, don’t qualify for new-student payments.  D-64 allegedly also has been charging the City for half-day pre-K and Kindergarten students for whom D-64 is not entitled to payments.  And the City claims it has been improperly charged for “new students” in the TIF district who aren’t “new” because they moved there from elsewhere inside D-64.

If that isn’t enough to sort out, there’s also a dispute about payments made to D-64 related to “new property” which – according to Matthew Welch, a TIF-specialist attorney hired by the City – may not even legally exist in the TIF district under applicable state law, as interpreted by the Illinois Department of Revenue.  Such “new property” charges might account for almost 3/4 of the City’s annual payment to D-64.

Consequently, it’s possible the City already has overpaid D-64 by millions of dollars over the past 11 years – and may have overpaid D-207 and the Park District, too!

So the City wants a reconciliation of its account with D-64 before coughing up another $600,000 for this year’s installment, which sounds reasonable notwithstanding the apparent lack of any sound justification for somebody(ies) at City Hall being asleep at the switch on this for the past 11 years.

But that’s not what D-64 wants to hear, especially when its own free-spending habits reportedly have made some of its programs and even its class sizes dependent on receiving that annual $600,000 (or so) from the City.  At least that’s what D-64’s leading tax/borrow/spend Board member, attorney John Heyde, is warning – while at the same time suggesting the City is acting in bad faith and attempting to “rewrite history just because [“The Bribe Agreement”] no longer suits [the City].”

So in addition to having the benefit of advice from attorney Dean Krone, who was a member of the D-64 Board back in 2003 and whose school law firm is the District’s regular counsel, D-64 now has hired former D-64 Board member Ares Dalianis of a different school law firm to handle any TIF-related litigation with the City.

Apparently it pays to be a former D-64 Board member who practices school law.

Before this turns into a full-blown legal battle on a collection of wide-ranging issues, however, D-64 owes the City a complete accounting of all the students for whom it has been charging TIF fees under The Bribe Agreement.  That way, the parties should be able to at least narrow the scope of any remaining disputes so that any litigation is as simple, narrow and efficient as it can possibly be.

Ideally, the only issues that would require court resolution would be purely “legal” ones related to whether or not there is – or can be – “new property” within the meaning of the PTELL/”tax cap” statute as interpreted by IDOR, an issue described in greater detail at Pages 4-5 of Hamilton’s April 14, 2014 letter, which would appear to have been written by the City’s TIF attorney.

From the sound of things, both the City’s counsel and D-64’s counsel may have screwed up in their haste to approve The Bribe Agreement 11 years ago.  But the last thing Park Ridge and D-64 taxpayers – not the exact same group of taxpayers, you know – need now is to have that screw-up compound by hundreds of thousands of dollars in legal fees because two cash-strapped local governmental bodies fighting over the same bone.

Hamilton’s letter seems to lay out the City’s position clearly and straightforwardly.

Where’s D-64’s equally clear and straightforward response?

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