Lakewood right to push for elimination of TIF district
The village board of Lakewood, Illinois, will decide whether to keep a TIF district approved in 2015 in a vote scheduled for June 13.
On June 13, the village board of Lakewood, Illinois, will vote to dissolve a recently created tax increment financing, or TIF, district, a special designation for property tax-funded property development districts.
The $66 million TIF in Lakewood was created in 2015 but has yet to invest in any development project. The immediate dissolution of the TIF is the effort of newly elected Village President Paul Serwatka, who made promises to eliminate the TIF if elected. Serwatka was part of a four-candidate slate that ran on the elimination of the TIF.
Serwatka is right to seek to dissolve the TIF.
While TIFs were originally devised to encourage development of “blighted” areas, they allow government to pick winners and losers among private enterprises and public projects, foster the proliferation of special taxing districts, promote a lack of transparency, and contribute to Illinois’ sky-high property taxes.
Illinois already has too many units of local government, the most in the nation. And it has thousands more special taxing districts like TIFs, as well.
McHenry County residents pay the 4th highest property taxes in the state
The property tax process is already far too opaque.
TIFs will only worsen the situation for the 3,800 residents of Lakewood.
Lakewood established a 600-plus-acre TIF district with the promise to develop sports complexes and other facilities, but to date the TIF has not yet committed to any project. It has, however, already spent more than $200,000 in legal and setup costs.
Under the rules for TIFs, the property values local government bodies can levy taxes on are frozen for the life of the TIF, typically 23 years. For that time, local governments such as school districts must raise taxes based on those frozen property values.
The TIF fund, in contrast, keeps the taxes generated by any increase in property values – the incremental taxes – to fund development projects. Money in TIF funds are used by municipal governments to invest in new property development and to provide incentives to property developers. Once the TIF expires, the tax revenues “controlled” by the TIF are then returned to local government bodies such as school and park districts.
TIFs lack transparency, give municipal governments too much power to pick winners and losers
TIFs are a controversial and nontransparent way for municipal governments to dole out property tax dollars to select developers. TIFs give too much power to governments to pick winners and losers among private enterprises and public projects and services. These funds can give a village president, for instance, power to grant development rights to whomever he or she wishes.
Serwatka argues that different projections of the TIF have not shown tangible benefits to Lakewood residents. And if the TIF fails, the risk falls on the backs of taxpayers.
Illinois needs fewer overlapping, duplicative units of local government and fewer districts with taxing authority – not more.
Serwatka’s decision to move forward with efforts to disband the Lakewood TIF is a step in the right direction.