TIF Condemnation Fight in Arlington Heights

by Cal skinner

It’s nothing new that municipalities are driving out successful businesses that do not maximize sales tax revenue for the local town.

I first ran across this phenomenon in Marengo when the son of a man whose father had just built a new trucking terminal in Cicero told me that the property was being condemned so Cicero could allow in big box stores that would generate more sales tax.

Now, the Village Board in Arlington Heights is trying to condemn a strip mall called International Plaza, located on Golf Road where it intersects with Arlington Heights Road, using the condemnation powers it derives from formation of a Tax Increment Financing district.

And you know what a fan I am of TIF districts.

At least in this county, the cities and villages (Richmond is heading in that direction with the help of the McHenry County Board and McHenry County College) flocking to this device to steal money from school and other local governmental districts and raise my taxes haven’t gone the eminent domain route yet.

The International Plaza is occupied by numerous immigrant-owned specialty stores. It’s the closest thing to the United Nations in the northwest suburbs.

Yet Arlington Heights wants it to be more white bread. A Super Target would be better than the diverse shopping opportunities now available.

The owner of the plaza stated that when the village designated this thriving specialty mall blighted” in 2002 it was 97.75% occupied!

That’s not an indication of blight in most people’s eyes.

At a Tuesday meeting of the “Coalition to Save International Plaza” a
determined group of merchants and minority business owners made plans
to defend their property rights which are under assault by the village.

A legal challenge has been brought by the owner of the X-Sport health club to remove this designation. A decision is expected this month

But the Arlington Heights shop owners want to cover all bases.

They’ve decided to engage in a high visibility publicity campaign to try to shame the village for their actions just in case the legal challenge is unsuccessful.

The group will be conducting a candle light vigil to protect property rights this Monday, December 18th, at 6:30 at the Senior Center where a village board meeting is scheduled. The senior center is located at 1801 W. Central Road.

Scott Bludorn, the 2004 Libertarian Party candidate for state representative against Republican State Rep. Sid Mathias and then ran against him in the GOP primary in 2006, getting 46% of the vote, is deeply involved in the fight.

Bludorn’s playing the role of citizen activist that former House Speaker Newt Gingrich advised for local politicians.

There was also talk of publicizing a national boycott of Target for their role in this situation at the recent meeting.

More information can be found in this 2002 Daily Herald article. 

Photos from Windy Pundit.com, posted October 10, 2005.

Of course, this was posted first on McHenry County Blog.

Comments

[TheReallyRightGuy]

I've eaten at some of the restaurants in that plaza. The place is certainly not blighted.

This is yet another example of authoritarian local government. Let's run these guys out of office.

[Don Castella]

Follow the money!

[Truthful James]

Arlington Heights was so successful with their downtown TIF (Not!) that they want to extend its time period.

The opponents need to get the school districts on their side -- unless they have been paid off already.

A racial discrimination suit (the owner is Chinese and most stores are owned by immigrants) would not be a bad way to go.

[Hascat]

I'm not sure it's fair to equate International Plaza with the United Nations. I'm sure the people at International Plaza have real jobs and do something of value.

[Bruno]

I did a part of my show on this issue today, and it generated scant interest. Is there proof that this resonates as it should.

In another thought, I'm not a fan of schemes to shower developers with goodies, but I must say that if TIF keep money out of the hands of school districts, they can't be all bad.

The idea that the Education Industry isn't as rapacious as Target or Walmart is a joke. If anything, diverting money to widening streets and setting up infrastructure is preferable to showering BIG ED incompetents with fat pensions.

[Cal Skinner]

What TIF's do, if local tax districts are not at their maximum rates--as few, if any are, because of how the tax cap works, is force me and you to pay more taxes as the tax districts raise their rates to make up for the taxes lost in the TIF districts.

If you want a real education on how TIFs work, got to McHenry County Blog and type in "TIF" in the search engine.

[Truthful James]

Ah -- Cal --

You are jumping to contusions.

a. they never lost any taxes because they never had them. You don't expand programs using money you never had. If no students are generated, do you really need a new schoolhouse?

b. it is not the max rate (applies on a fund by fund basis) that binds, it is the max levy (across all funds, keping under the max rate in any fund.)

[NW burbs]

Sure, massage parlors and empty store fronts are a great addition to any community -- especially when those "massage" parlors keep getting busted for prostitution.

The "big name" stores mentioned in the posts are looking to get out because the plaza's owner is letting the place go to pot. In summer, the weeds are as tall as the trees and paint and concrete are chipping off everywhere.

I'm not saying the village is right for wanting to usurp one business with another, but just drive by the place a few times and you'll see what's really going on there. It's a rundown pit that only has the shops it does thanks to its easy-access location near major roads and minutes from the tollway.

--

Cal, you fundamentally misunderstand the effect of TIFs on other taxing bodies' levies, as Pete (aka, James) briefly explains.

If you have an overall max levy and, within that levy, an underlying max rate per fund, you can't raise anything beyond those maxes, whether your overall income is affected by a TIF or not.

--

Pete (aka, James), if the downtown TIF was such a failure why are there so many new restaurants, shops and sold-out condos in downtown Arlington?

They wanted to extend the TIF because the old Paddock block was still undeveloped. That's more a problem of the land's owner (a developer) not having gotten their act together than it is of the village's TIF districting.

If you'd been to downtown Arlington before the renovations you'd be lying if you said you preferred it in the old, rundown days.

[Cal Skinner]

I know that when a tax district does not get what it wants and is allowed under the tax cap law, it can raise its rate to increase taxes on others. That is what Crystal Lake School District 47 Superintendent and former Business Manager Ron Miller qualtified and I published on McHenry County Blog.

If you want to read the story and the logic, type in "Ron Miller" in the search engine on the top of McHenry County Blog.

[NW burbs]

Cal,

Perhaps school districts have an exemption I am unaware of, but the "rate" you refer to still has caps on it (in addition to the overall tax cap).

That is what I meant -- whether by the overall tax cap or the individual fund rates, taxing bodies cannot arbitrarily raise levies or rates simply because they're being impacted by a TIF district.

[Cal Skinner]

The school districts are well under their maximum tax rate limits because the value of property, hence, assessed valuation, increases much faster than the cost of living which governs the amount they can extend (that is, request).

If assessed value increases that would have come from the property in a Tax Increment Financing district disappears, that is, is frozen, the district can raise its tax rate to pry the money out of the rest of those living or owning property in the tax district.

There is what I would characterize as a TIF Tax Shift from the TIF property owners to you and me.

[Estebbins]

As somebody who until very recently lived in downtown Arlington Heights and lived in one of those "sold out condos," I can tell you the TIF is making the cost of living there pretty ridiculous. Our rent increased over 25% in the three years we lived there, with increases in other buildings we had our eye on increasing undre 10%. This happened because Arlington Heights schools are overflowing, and they had to pay for the sculpture walk and fancy light-up sign, and the new police station somehow, so they increased property taxes for residents since they couldn't for businesses, because of the TIF. We would drive to other grocery stores because everything cost so much more at the one we lived closest to, and our cars were repeatedly vandalized in the village-owned garage we parked in because of cuts to the police force (they couldn't afford to pay an extra officer to patrol downtown at night after paying for that electric sign). I actually shop at International Plaza pretty frequently, enough to notice that all the white-owned business across the street are surrounded by more vacancy than the Asian-owned shops in the plaza. If one side of the street is blighted, it is not the International Plaza side. Incidentally, I am a caucasian myself, but I love any karaoke bar where you can get good noodles, too. I digress. We found a larger apartment for less money just by moving a couple of miles down route 14. Many of the people I know from my old building have since left, finding themselves unable to deal with the skyrocketing property taxes if they own and the high rent increases if they don't. The TIF lures people in with pretty new buildings, but once you actually live there, you are quickly disappointed when the cost of living rises and your favorite shops are replaced. The side of 14 with the CPK has become a revolving door for businesses--in three years, one shop had four different tenants--and on the other, there are numerous vacancies with still more businesses leaving, including my favorite tea shop.

Maybe if Arlene Mulder wasn't so busy skydiving in Israel, she would see how unsuccessful and unpopular this idea is.

[NW burbs]

Cal said, "If assessed value increases that would have come from the property in a Tax Increment Financing district disappears, that is, is frozen, the district can raise its tax rate to pry the money out of the rest of those living or owning property in the tax district."

And therein lies the rub -- I don't think those properties in the TIF 'disappear' when the tax cap is calculated (they don't change the EAV in other words). Or else there would be a double-dipping scenario when the TIF expires and the previously-TIF'ed properties come "back online".

The tax cap is an inverse ratio -- if the property values go up, the cap becomes more stringent. TIFs don't alter that calculation.

--

Estebbins,

Instead of whining about skydiving maybe you should look at the real culprit -- increasing property values because the area has become so valuable. What is happening is the county is assessing wildly inflated property values because nearby properties now have 10 and 15-stories when they used to have only 2 or 3.

How is a county action the village's fault?

Those property taxes, based on the county's assesments, are passed along to businesses and are forcing some businesses to relocate.

As for your CPK reference, the GAP left the location you describe because they already had an Arlington Hts. store (a stand-alone store on property they own). The GAP corporation prefers stand-alone stores to rented spaces for obvious reasons. They experimented with a central location to see which store did better -- if the one next to CPK didn't close the one at Rand and Palatine would have... The mayor can't control a corporation's experimentation.

Since the GAP left that store's space was split in two so your "four different tenants" gripe is misleading. Before the menswear store (which is there now and has been for some time) there were two shops sharing the split space at different times -- a temporary big toy store (the big plastic play houses and slide sets for kids) and one of those wholesale rug dealies.

[Cal Skinner]

In my part of Illinois, there is an annual multiplier of at least 5% applied to all assessed valuation.

After a property goes into a TIF, the municipality grabs all of the incremental revenue, while the school districts, etc., get a share based on the assessed valuation prior to the imposition of the multiplier.

Run that out for 23 or more years and it is a significant amount of money that other taxpayers in the school, park and other districts have to pay, assuming, as is the case in Crystal Lake, that property values increase each year.

[NW burbs]

Cal, you're still missing my point.

You say, "Run that out for 23 or more years and it is a significant amount of money that other taxpayers in the school, park and other districts have to pay, assuming, as is the case in Crystal Lake, that property values increase each year."

I agree, except that the other taxing bodies -- school, park, library -- which overlap the TIF district have no ability to recoup that 'significant amount of money' because of the tax cap law.

Sure there is a hole in the budget because the TIF is missing from the 'tax rolls' -- but there is no way to distribute that 'missing' amount of money out among other properties being taxed. The caps prevent it by way of the EAV calculator.

You may be thinking that the other properties somehow make up the difference but that's only a perceived notion, not a reality, because the taxing bodies are prevented by the EAV/tax cap calculation from distributing the equivalent value of the 'missing', TIF'ed property. The EAV doesn't alter the calculation just because of a TIF district.

In short, there is no ripple effect to other properties because the tax cap laws prevent it.

This is why school districts in particular are fighting new TIFs and TIF extensions. They have no way of making up the 'lost' revenue, despite your claims to the contrary.

Further, there is nothing in the law requiring municipalities which create TIF districts from sharing the resultant TIF revenues -- any that do, do so at their discretion.

And finally, the myth of a property tax 'windfall' after TIFs come 'back online' (when a TIF expires, and after the TIF'ed property's value has supposedly increased dramatically) is just that, a myth.

Any sort of windfall effect is muted by the fact that TIF districts are usually quite small portions of an overall taxing body's boundaries and also the resultant 'increase' in tax dollars (because the TIF district property is now taxed in regular fashion) is still held down by the tax cap laws.

I don't know how much plainer I can get regarding property tax law and TIF laws' effects on same.

[Cal Skinner]

If a tax district which has a TIF imposed upon it is beneath its maximum tax rate, it can raise the rate to make sure it does not lose any of the amount allowed under the tax cap.

If assessed valuation is missing from the frozen TIF district properties, I will end up paying a higher tax bill because of that.

I wonder if you have gone to McHenry County Blog and typed "Ron Miller" into the search engine and read what he said.

At the Crystal Lake Grade School Board levy hearing last night I asked if District 47 had quantified the shift yet. It will be ready when the new assessments are made--about a month.

I doubt it will be much for each home, but only time will tell.

[Brian]

This is a gem as far as international business goes. It's the place to be for people like myself. So leave it alone.