TIF District Under Consideration

The City Council will be discussing Tax Increment Financing (TIF) districts at tonight's work session.  TIF districts are a tool that has been used by cities to promote economic development of depressed areas.  Such districts are not without controversy though because the benefits they provide come at a cost to other areas and taxing bodies.

A TIF district is a defined area encompassing all the properties within the boundaries that are created for it.  The amount of property taxes received by each of the taxing bodies is frozen for 23 years.  Over those years as the property values increase, the taxes paid also increase; but the increased amount is paid to the city and goes to a designated TIF fund.  That increased amount is the tax increment.  This money is then used to pay for improvements within the TIF district that are meant to attract new development to the TIF district.  These improvements can be anything from streetscaping to parking garages to even providing incentives directly to businesses.  The funds are not supposed to pay for ordinary operating expenses such as filling potholes, plowing streets, or providing police protection.  The area encompassed within a TIF district are meant to be properties that are currently blighted and are not reasonably expected to be able to be improved otherwise.

Many cities have used TIF districts to create new economic development and have seen them as very useful tools.  They feel that without the TIF districts redevelopment of blighted areas would not have been possible.  TIF districts are able to provide large amounts of money for redevelopment especially in cases where the improvements are put in early on using borrowed money and then paid back over the 23 years as the increased tax increment dollars are collected.  This of course exposes the city to the risk that the increase is not sufficient to pay back the debt.

TIF districts are opposed by some because of the effect they can have on other taxing bodies, their long life, and their misuse in some cities.  The amount that other taxing bodies receive in property taxes from a TIF district are frozen for 23 years.  The reasoning behind this is that these are blighted properties that would not otherwise have increased in value if not for the improvements.  However, this is a false notion because one would be hard pressed to find any property in this area, even the most blighted, that is today paying less in taxes than they were in 1986.  A rising tide lifts all boats.  This means that the schools, parks, and fire districts are losing out on revenue they otherwise would have collected even if no new development had happened. 

TIF districts can also create new costs for other taxing bodies that did not previously exist.  If a TIF district is developed to include condos and other residential uses in an area that previously had none there are no more students to be educated, but no additional funds to pay for that education.  The rest of the taxpayers outside of the TIF district would have to pick up that cost.  The same would be true of increased need for policing if the TIF contained additional commercial uses such as bars, restaurants, and shopping.  Many proponents of TIF districts claim that they do not increase anyone's taxes.  However, the additional costs created that cannot be paid using TIF funds must be paid for by someone and that someone will be all the taxpayers outside of the TIF district.

The third concern raised is the misuse of TIF districts.  They are meant for blighted and depressed areas that would not otherwise be able to be redeveloped into a higher, better use.  There are certainly cities that have found areas that this applies to.  However, others have taken areas that are already improving and used TIF districts to speed the process along or to be able to provide even greater economic incentives to developers.  TIF districts were not meant to be used as a common economic development tool in all situations, they are instead meant for specific circumstances.  This is a concern because of the costs that TIF districts can impose upon other taxing bodies and on the taxpayers.  That cost may be worthwhile if it leads to development that would not otherwise be possible, but it would be a high price to pay for development that could have been brought about by other means.

I have been involved in the creation and administration of TIF districts in other cities and have seen the potential benefits they offer as well as the problems they create.  Before the city creates on, it is important that we all are educated and informed.  This means that we need to know exactly what properties will be included, what the money will be spent on, if financial incentives are being given to businesses, and what the impact on the schools and other taxing bodies will be.  Following tonight's work session, I will post details of what is being proposed by the city as well as my own analysis of the information presented.

Mayoral Ethics, Part II

A few months ago it was revealed that the Committee to Re-Elect Mayor Nick Churnovic had accepted donations from two engineering firms that were actively seeking to do business with the City at that time.  A portion of the City Council at that time spoke out against his actions and publicly stated that they did not want to see pay-to-play politics become the way Crest Hill is run.  

Well, the Mayor has now reaffirmed his belief that pay-to-play is the means by which he is governing the City of Crest Hill.  His re-election committee has accepted money from Allied Waste.  This is the same company that is looking to get a five year garbage services contract from the City without bidding.  Mayor Churnovic expressed his strong support that the Council not go out for bid but instead consider only proposals from Allied Waste.  The reason for this is now very clear.

Apparently, there is no need to bid for contracts with the City if you contribute to the Mayor's re-election campaign.  This is a clear abuse of his office as Mayor and a betrayal of the public trust.  How many other instances are there of the Mayor accepting donations from those either doing business with or seeking to do business with the City?  After seeing how the State has been hurt by this type of corruption, do we really want this for Crest Hill?  

The time has come to demand better from our politicians.  We do not need a Mayor who trades city contracts for campaign contributions any more than we need a Governor who sells a Senate seat for campaign contributions.  Why would we want the shame of pay-to-play politics on a local level?  The Mayor has shown repeatedly that he desires to run the city in this manner though.  The voters need to send a clear message come April by voting to replace the Mayor and any other official that supports his way of running this city.

Wasting Money

Crest Hill has found yet another way to waste the taxpayers' money.  This time I had to look no further than my mailbox.  I received vehicle sticker applications for eight vehicles.  Of these only two were for vehicles currently owned.  

Four were for vehicles that had been registered to previous residents who have not lived at my address since at least 2005.  Yet, the City has seen the need to send applications each year.  The other two were for vehicles that I donated to charities in 2006 and 2007.  Neither of these were registered with the city in 2008.  Would it be so difficult for the City to purge its records of vehicles that were not registered last year? I could even see giving them an extra year in case some people overlooked getting a sticker for one year, but why send for vehicles last registered in 2005 or before?

Even more distressing is that the postcards were sent with first class postage as if they were letters and not post cards.  This means that every single application sent out was at an extra cost of 15 cents.  That may seem small, but it adds up when you think of how many thousands of vehicles are in Crest Hill and then add the thousands of vehicles that used to be in Crest Hill and still get postcards.

Once we figure the cost of printing and mailing all the applications, the cost of the actual vehicle stickers, and the time spent by city staff administering the vehicle sticker program; a significant portion of the revenue is spent on that.  It is wasteful to have in place a tax that has little purpose beyond raising enough revenue to continue to be administered and enforced.

The time as come to evaluate this program and determine if it is worth saving.  City Clerk Christine Vershay-Hall has stated previously that she thinks the vehicle stickers should be done away with.  And I agree that as long as the cost of the sticker is held so low, there is no reason to continue it.  And this does not seem to be a good time to raise the cost of stickers.  I would much rather see the stickers ended.  The loss of revenue will be minor because the cost savings would be significant.  If the stickers are not eliminated; the process of sending applications and issuing stickers needs to be made much more efficient.  

Trashing the Principles of Good Government

Public bodies typically put contracts for goods and services out to bid for a number of reasons.  The primary reason is to obtain the best price possible through competition.  Additional reasons relate to fairness to all businesses, eliminating discrimination, and reducing corruption.

The best price for a good or service can be obtained through competition, which is the basis of the bidding process.  As an example lets pretend that I am going to buy your car.  In one case, I ask you to tell me how much you will sell your car to me for and tell you that I want your car and will not buy a car from anyone else or even find out the price of a similar car from anyone else.  In the second case, I ask you how much you will sell your car to be for ad tell you that I will be getting prices from 5 other people with nearly identical cars and will buy the one with the lowest price.  In which case will you give me the lowest price?  I think the clear answer is that the lowest price will be given in the second case where there is competition.  Of course, some people may ask for the same amount in both cases, but it would seem pretty illogical for anyone to offer a lower price in the first case.

Well, most of the City Council has decided that Allied Waste is illogical and will offer the city the best price on garbage service if they are allowed to propose a 5 year contract without having to bid against other companies.  Instead of finding out what other companies would charge to provide service they have decided to seek a proposal from one company only.  Ray Soliman was that only Council member to speak up against this plan.  The rest of the Council and the Mayor decided that financial responsibility and good government are not of importance.

It is possible that Allied Waste will provide the best service at the lowest price.  However, we will never know if that is the case unless we allow all companies interested in providing garbage service to bid for the contract.  What is the Council's reason to oppose bidding?  Their publicly stated reason is that they believe that Allied Waste will bid a higher price if faced with competition than they would offer if only their proposal in considered.  That seems to run counter to logic, but we all know that there are members of this Council who would never let logic stop them from violating every principle of good government that they can violate.  As for the members who normally support the principles of good government and fiscal responsibility, I can only hope that they will realize their error before approving a contract without bids.  Ray Soliman was the lone voice on the right side of the issue at the work session on November 21, but I will be looking for others to join him when the issue comes up in a Council meeting.

Another item to be aware of besides the decision not to put the contract out to bid, is that the Council is looking for Allied Waste to hold rates flat for the first two years and defer the increases until the third, fourth, and fifth year of the contract.  I can assure you that the increases in the last three years of the contract will be considerable in order to make up for the lower rates the first two years.  On top of this they are looking to allow Allied Waste to add a fuel surcharge if fuel prices go above a set price.  The residents will be forced to help Allied Waste cover their fuel costs if diesel prices go up again, but we will not have our garbage rates go down if diesel prices fall.  The City Council sees no problem with this one sided proposal. 

The only possible positive is that they are looking to provide wheeled containers with lids to all the homes for trash and recyclables.  There some definite benefits to this idea and I know a number of people have been asking for this.  Of course there is no reason why this could not have been included in a request for bids from other companies.

Job Well Done

The City has been working with Canadian National Railroad to reach an agreement to have the railroad make needed improvements within Crest Hill, if they are approved to purchase the EJ&E tracks.  This agreement was approved by the City at tonight's meeting after a number of work sessions and a great deal of communication between the City Attorney and CN.  The City Administrator also spent a great deal of time working out this agreement.

The city will be getting quiet zones, sound barriers along the tracks near a residential neighborhood, a berm near another neighborhood, a fence and grubbing where the tracks pass near Richland school, and a commitment to reduce the idling of trains in the city.  All of this is being paid for by the CN at a cost of potentially over $1 million.  They are of course not doing this merely out of the goodness of their hearts, but to try to win support for their purchase of the tracks.  The city though did work hard to get all that they could.  

I commend the hard work of city staff on this effort and congratulate the Council on approving an agreement with a company that many in Crest Hill and many other suburbs would rather not see come here at all.  They realized that we do not have the power to stop the deal, but we did have the power to create a number of benefits for ourselves.  This willingness to work with CN has not been present in many other communities.  Crest Hill definitely stands out as a shining example in this case.  Too often I wish we would follow the example of other cities that are doing the right thing, but in this case we have chosen to set the example.  

I will be hoping that our professional city staff continues to help the Council take advantage of opportunities such as this to put aside politics and do what is best for the city and its citizens.  And of course that the Council continues to have the wisdom and dedication to take such actions.

Still Waiting for a Plan

The City has begun some improvements to the water and sewer systems.  Smoke testing of the sewers has been done and further analysis is scheduled.  Cora Street is under construction and other improvements have been begun.  What has not happened however is a plan has not been presented.  Over a year after our water and sewer rates were increased, there is still no detailed Capital Improvements Plan for the water and sewer system improvements.

This plan should include lists of projects to be completed each year for the next 10 to 20 years, both new infrastructure as well as major improvements to existing infrastructure.  Also the source of funding for these projects should be identified for each year.  This type of plan allows the city to balance its expected revenue against its expected needs and then plan the work over a longer time frame.  Major maintenance items are budgeted for so that they are not surprise costs when things break down from age and potential shortfalls are known about years in advance.   

Most cities have these types of plans for all capital spending, such as roads, buildings, water systems, storm and sanitary sewers, and even vehicles. They are valuable tools for ensuring the long term financial health of a city and the most efficient use of city funds through planning.  I do not expect that Crest Hill implement Capital Improvement Plans for all aspects of the city immediately, although it would be a good thing and should have been in place already.  I do feel though that after putting in place steep rate increases on top of automatic annual increases, that exceed inflation, they should have such a plan for the water and sewer systems.  Continuing to use pay-as-you-go does not serve the best interests of the citizens of Crest Hill.  

We deserve better, we deserve well planned improvements to bring our water and sewer systems, we deserve to have our money used wisely and efficiently.  I just want to know when we will get what we deserve.  I want a plan that is more than just raising our rates.  I want a plan that is fixing our problems and letting everyone know what our money is being used for.  

A Different Way of Doing Things

While, I am a resident of Crest Hill and have taken an intense interest in the operations of our city government, I also a resident of a number of other political entities.  One of which is Plainfield Township, due to my living west of Gaylord Rd, unlike most of the rest of the city which is in Lockport Township to the east.  I have long meant to attend the meetings of the township as well as other entities in the area.

My experience at the township meeting stood in stark contrast to the many Crest Hill City Council meetings I have attended.  This was most evident in how public comment was handled.  Public comments were taken at the beginning and at the end of the meeting.  Taking comments at the beginning allowed citizens to speak on issues prior to action being taken and allowed residents not to have to stay until the end of the meeting just to be heard.  Of even greater note though was how the comments were responded to by the Township Supervisor and Board members.  The residents were treated with respect, their issues were discussed in detail, there was a dialogue between the residents and the elected officials, and the residents were told exactly what actions would be taken in response to their comments.  The board spent half an hour dealing with the two residents comments regarding the recent flooding in the township.  

Contrast this with how the Crest Hill City Council treats its residents when they make public comment.  The only response to many comments is a cursory "thank you."  Others are met with derision and dismissal by Mayor Churnovic.  The best one can hope for is a statement that the Mayor will look into it and that the resident should talk to the Mayor later.  The Mayor and Council refuse to ever discuss a matter with a concerned citizen publicly, even though many times an issue affecting one person affects a number of others in the City.  Crest Hill views public comments as something that has to be endured, should be completed as quickly as possible, and do not need to be followed up on.  I think this makes a strong statement about how the City and some of its officials view the citizens and their concerns.

This is jut one more reason why change is needed in the City of Crest Hill.  A change of attitudes.  A change of priorities.  And a change of elected officials.