Carol Stream to Raise Wheaton/Warrenville taxes?

On December 5, the Village of Carol Stream may vote to raise the property taxes of Wheaton and Warrenville residents.  The Carol Stream trustees are considering creating a tax increment financing (TIF) district for property at North Avenue and Schmale Road.  A 'yes' vote would mean that the additional property taxes that would otherwise be paid from the TIF district will be shifted to every other taxpayer in District 200, plus the other taxing bodies (including Milton Township) that include this area.  I attended the November 21 public hearing at the Village Board meeting and spoke out against this proposal.  Unfortunately, no one else bothered to show up from District 200 or any other affected taxing body.

Some District 200 board members regularly complain about the amount of tax exempt property in District 200.  You’d think this would be a perfect opportunity for the Board to speak out against the creation of what is, effectively, even more exempt property.  Apparently not.  According to an e-mail from senior District staff, “we have not formally supported or opposed the TIF.”  Silence on the TIF is progress; in past years the District actually supported the Wheaton Courthouse TIF, which cost our schools millions in new revenues.  But despite the Board’s rhetoric about “getting property back on the tax rolls,” when District 200 actually has a chance to help homeowners and protect the tax base, it does nothing.

TIF districts freeze assessed property values within their boundaries for up to 23 years at a “base” level.  The properties still pay property taxes on their actual value, but the tax collected on any increase in property value above the “base” - even natural growth caused by inflation - does not go to our schools, parks, and other taxing bodies.  Instead, it goes to the municipality – in this case, Carol Stream – which gets to spend the money for projects that solely benefit the TIF area.  Meanwhile, the taxpayers outside the TIF have to pay higher taxes to make up for the lost revenue to schools as a result of the TIF.  Under tax caps, every dollar lost to TIF is directly shifted to every other taxpayer - we foot the bill.

TIF proponents claim that the TIF is a device to “jump start” economic development of so-called “blighted” properties.  But this particular TIF looks like a lousy deal.  Even the TIF consultants don’t claim that the North/Schmale properties have declined in value ("Factor M").  Instead, they point to factors such as potholes in the parking lot as evidence of “deterioration.”  They project the TIF will cause the property values to grow by at least $45 million over 23 years.  But this is a growth rate of only about 4.5% a year.  Over the last 10 years (including the current recession), the average growth of property values overall has been 5.75%, so this TIF is projected to underperform the market.  Moreover, they want to spend $22 million to generate $45 million in new value.  That means the real projected growth, net of the TIF subsidy, probably won’t even match the rate of inflation.  This is not a good investment, unless you’re on the receiving end of the handout.

Between 65 and 70 cents of every TIF dollar is diverted from local school districts, usually to subsidize real estate developers.  TIF giveaways are too often merely welfare for the well-connected.  Groups as diverse as the Tea Party and Occupy Wall Street agree that government handouts for special interests need to stop.  If District 200 won’t act to protect its tax base, I encourage all taxpayers to tell the Village of Carol Stream no to the proposed TIF district.  The taxes you save will be your own.