Kadner: Sen. Hastings’ bill would extend Crestwood TIF
By Phil Kadner firstname.lastname@example.org March 28, 2014 5:52PM
Michael Hastings | Supplied photo
Updated: May 1, 2014 6:53AM
State Sen. Michael Hastings, D-Orland Hills, said he supports extending the length of a special taxing district in Crestwood.
Crestwood is seeking a 12-year extension on the 135th Street and Cicero Avenue TIF district, which is set to expire in 2025.
The village failed to make any payments on the TIF bond principal of $34.7 million for nearly a decade.
Because a TIF prevents government bodies (including school districts) within its boundaries from accessing any increase in property tax revenues, Crestwood has asked 10 other government entities within the TIF to sign off on the extension.
But Cook County Elementary School District 130 (which includes most of Blue Island, Alsip and Robbins, as well as Crestwood) has refused to support the TIF extension, which must receive final approval from the Illinois Legislature.
According to state Rep. Robert Rita (D-Blue Island), House rules require that all school districts sign off on a TIF district extension to receive approval in the Legislature.
Hastings said there is no statutory rule in the Senate that requires such support from government entities in a TIF district and no Senate protocol requiring letters of support from them.
Hastings said he is sponsoring SB 500 to extend the life of the TIF district because he believes it’s “the right thing to do” for the community.
“I spoke to the mayor of Crestwood (Lou Presta), and he makes a compelling argument on behalf of why he wants to extend it,” Hastings said.
When asked about the District 130 school board refusing to support the TIF, Hastings said, “It is my understanding that had more to do with politics than finances. They need to make a prudent fiscal decision instead of making a political one.”
He urged the school board to reconsider its vote.
District 130 Supt. Raymond Lauk said: “The school board’s vote was a financial decision. Politics had nothing to do with it.”
Lauk said on the same night that the board voted not to support the TIF extension, it approved a multimillion-dollar bond issue to meet its bills.
“We do not have extra money sitting around in our operating budget,” Lauk said. “We are in a very difficult financial position here.
“And one of the reasons for that predicament is that the state Legislature has failed to fund the schools in this state.
“The Legislature has not met its obligation to provide the foundation level for education that the state itself set as the baseline for school funding.
“So until the Legislature stops playing politics with school funding, it shouldn’t point fingers at anyone else.
“Our school board has been asked to reconsider its vote on the TIF extension,” Lauk said. “But it very firmly said it wasn’t going to do that. That was as solid a vote as I’ve ever seen from our school board.”
District 130 officials have estimated that the district would lose $9 million in tax revenue by extending the TIF district for 12 years.
That is money the district would receive after 2025, when the current TIF district expires, but would not receive for another 12 years after that if the extension passes.
Community High School District 218, which also is in the TIF district boundaries, approved a letter of support for the TIF district but demanded Crestwood sign an intergovernmental letter of agreement.
Under the agreement with the school district (which includes Eisenhower, Shepard and Richards high schools), the village would agree to use all of the tax income from the TIF district to pay off the bond debt, principal and interest and to not reinvest any of that money for improvements within the TIF.
Typically, money from increases in property value resulting from business development in a TIF district is reinvested in the district to attract additional business development.
District 218 also received promises that its lawyers and accountants would be able to audit the TIF accounts on a regular basis.
Lauk said District 218 could afford to be generous because it has far more financial reserves in its coffers than his school district.
Without the TIF extension, the Crestwood mayor said, the city would have to begin making TIF payments of $900,000 a year out of its general revenue funds to avoid default. The total annual bond payment is nearly $1.7 million.
To make its payments on the principal and interest, the village would have to generate new revenue through fee increases on Crestwood residents, make substantial cuts in the village services, or a combination of the two.
By restructuring the bond issue over more time and lowering its interest payments, village officials estimate Crestwood could save millions of dollars.
Crestwood already is under substantial financial pressure due to numerous lawsuits arising from a tainted-water scandal.
The TIF district in question, east of Cicero Avenue and bordered by Calumet Sag Road on the north and approximately 135th Street on the south, has been successful.
Property values in the TIF district have increased about 110 percent, from $9.3 million to $19.8 million during its life, according to a recent study.
The district has attracted a Menards, a Wal-Mart and 13 other businesses that have generated 627 new jobs and produced $6.3 million in additional sales tax revenue for the village.
Hastings pointed out that he is a former school board member and sympathetic to the financial plight of school districts and the impacts of TIFs on their budgets.
“But I have to look at the big picture, what’s best for the entire community, and I think it makes sense to extend the life of the TIF district,” Hastings said.
Hastings said that once the legislation passes the Senate, Rita would be the most likely House member to pick up sponsorship in that body.
“Someone else could do it, I suppose, but I don’t know right now who that would be,” Hastings said.
Rita did not rule out taking sponsorship of the bill in the House but emphasized that House rules require letters of support from the government bodies impacted, especially local school districts.