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Scroll down to hear audio from the meeting and read a response from Oak Park’s township assessor

It took nearly a half hour for Village President David Pope to explain to the District 200 Board of Education at its meeting Thursday, and to an audience filled with officials from various other taxing bodies, why village trustees, Feb. 23, voted to pay District 97 more than half a million dollars in tax increment financing (TIF) funds but nothing to the other jurisdictions.

Village trustees voted unanimously to approve a resolution authorizing a $650,478 payment to Dist. 97 from the Downtown TIF. None of the taxing bodies, including Dist. 97, knew about it in advance.

David Pope explains the village’s reasoning for making a TIF payment to only D97. He spoke before the D200 Board of Education.

When the other jurisdictions got wind of the village’s move – thanks to a member of the high school board who spotted the resolution as an agenda item on the village’s Web site – e-mails shuttled between officials from the school districts, Oak Park Township and the Oak Park Public Library.

Officials in attendance at the Dist. 200 meeting included Dist. 97 Supt. Constance Collins; Dee Leonard, president of the Oak Park Library Board; and Oak Park Township Supervisor David Boulanger.

Pope, who attended the meeting with trustees Greg Marsey and Ray Johnson, explained the reasoning behind the village board’s action.

According to Pope, the village was trying to pay funds owed to Dist. 97 as outlined in a 1985 settlement agreement between the village and the Oak Park elementary school district. The settlement stemmed from a 1984 lawsuit, filed by Dist. 97 against the village to prevent the creation of the Downtown TIF.

The agreement, Pope noted, outlined two options the village could use to pay Dist. 97: either directly from the village’s general fund or by declaring a “statutory surplus,” which means that each taxing body would receive a portion of money.

Since 1985, the village each year has used the statutory surplus to pay all the taxing bodies. Pope noted that the ’85 agreement also stipulated that the money be paid by February of each year. Until this year’s income is received from property taxes, Pope said the village doesn’t currently have money sitting in its TIF account to pay every taxing body. He estimated that amount to total $2 million.

Pope explained that the village would have had to borrow the money to fulfill its obligation to each jurisdiction. Ruling that out, Pope said the village either had to come up with another way to pay or ask each jurisdiction to wait. He noted that the village faced criticism last year for delaying payments, which didn’t arrive to the various taxing bodies until November.

“That, coupled with some of the more recent issues we have faced, put our staff in a situation of saying let’s make darn sure we’re living up to every crossed T and every dotted I of any underlying agreement, unless we can get an agreement with the other governing bodies to delay this to the point where we actually have the money to be able to do a surplus distribution,” Pope said.

Instead of paying out of the TIF, therefore, Pope said the money for Dist. 97 would come from the village’s general fund. He added that Dist. 97, like the village, has been cash-strapped for some time, which necessitates a timely TIF payment to that school district. He said no check has been cut to Dist. 97 and the resolution was just an authorization of payment.

Pope insisted each taxing body would not be denied their money. He admitted that he and other village officials failed to alert the other jurisdictions prior to last Monday’s resolution. The measure, Pope noted, contained a motion stating that the village will talk with other jurisdictions about receiving a late payment.

Supt. Collins said Dist. 97 would work with the other jurisdictions and is willing to wait for its payment.

“We’re definitely aware of the financial difficulties Dist. 97 has, but in the spirit of cooperation, to have to wait a few months, or just until we can all work this out together and see that the communication takes place, we’re willing to do that,” she said.

Dee Leonard said the library board could also wait. Boulanger maintained that he didn’t think the village acted with any covert intent and expected it to fulfill its obligation to the township.

Dist. 200 board President Jacques Conway said he appreciated the village not wanting to put an extra burden on taxpayers by having to borrow money, but insisted that each jurisdiction be included in talks moving forward.

D200 board member uncovers vote

Sharon Patchak-Layman, a member of the Dist. 200 school board, was the only official from the other taxing bodies who knew about the Feb. 23 vote. She said she often checks the village board’s agenda on its Web site, and saw the resolution up for a vote that evening. She then called Cheryl Witham, chief financial officer for OPRF, who knew nothing about it. They both attended the village board meeting. The next day, Witham e-mailed officials from the other taxing bodies, and Patchak-Layman requested that the issue be placed on the agenda for the Feb. 26 Dist. 200 board meeting.

A former member of the Dist. 97 school board, Patchak-Layman, a village clerk candidate, attended that meeting on Feb. 24 and, during public comments, told members about the village’s vote. At the Dist. 200 meeting on Thursday, Patchak-Layman blasted Pope and the village for its handling of TIF distribution.

“I just think it’s disingenuous to say we have to stand in line because you promised money to everybody else out of the TIF fund – for parking, for development – and that the schools, who contribute 66 percent of the dollars in that fund, are having to wait,” she said.

CONTACT: tdean@wjinc.com

Web Extra!

Oak Park Township Assessor Ali ElSaffar’s explanation why village can’t pay only Dist. 97

February 26, 2009
TO: All Interested Parties
FROM: Ali ElSaffar, Oak Park Township Assessor
RE: Distribution of TIF funds

I have spoken with a number of people today regarding a change that the Village is seeking to implement regarding the way it distributes money from the Downtown TIF to the other taxing districts. From 1985 until the present, the Village has been providing a portion of revenue from the Downtown TIF to the other Oak Park taxing districts. Now, the Village apparently wants to provide money only to District 97, and at least for the time being, wants to stop making payments to the other districts from the TIF.

For the reasons that follow, I do not believe the Village has the legal right to unilaterally change the formula for TIF distribution from the Downtown TIF:

In 1984, District 97 sued the Village of Oak Park to prevent the Village from establishing what is now known as the Downtown TIF. The lawsuit was settled in 1985 when District 97 agreed to allow the establishment of the Downtown TIF and the Village agreed to give the district a percentage of the revenue that District 97 would lose as a result of the establishment of the TIF. Paragraph 3.1 of the settlement agreement said that “the Village shall annually pay the School District an amount equal to twenty-two and one-half percent (22-1/2%) of the District 97 Deficiency…” By using the language ‘shall’ it is clear that this provision binds the Village and that it cannot be changed unilaterally by a future Village Board.

Paragraph 5.6 of the 1985 settlement agreement is entitled “Payment of the Settlement Amount.” This paragraph gives the Village two options when it pays District 97. The Village can either “pay the Settlement Amount directly to the School District or may cause payment to be made by the declaration of Statutory Surplus…” The term ‘Statutory Surplus’ comes from the TIF statute, which states that when a surplus is declared, all surplus money must be returned to the taxing districts in proportion to each district’s share of the tax bill. Since the 1985 Settlement Agreement, the Village has declared a Statutory Surplus every year, and thus has returned money from the Downtown TIF to each taxing district serving Oak Park every year.

In 2003, the Village extended the Downtown TIF through 2018. This extension was done with the consent and support of the two school districts, but only after the two districts reached an agreement with the Village commonly known as the “Carve-Out Agreement.” The intent of the Carve-Out agreement was to provide additional revenue from the TIF to the other Oak Park taxing districts in exchange for their support of a TIF extension. The Carve-Out Agreement did not supplant the 1985 settlement agreement, but was instead intended to be in addition to the 1985 agreement.

Since District 200 was not a signatory to the 1985 Settlement Agreement, the district was sensitive to a provision in the 1985 Settlement Agreement with District 97 that could harm District 200, and accordingly sought to change the provision. Paragraph 5.6 of the 1985 Settlement Agreement gave the Village the option of paying the settlement amount directly to District 97. District 200’s concern was that if the Village chose to pay District 97 with funds that were not TIF funds, the payment would not be governed by the TIF statute, which meant that the Village could thereby avoid making payments to District 200 and the other taxing districts. District 200 did not want to lose the share of the Settlement Agreement that it had been receiving since 1985, and so it succeeded in adding the following provision in Section 3 of the Carve-Out Agreement:

“The Village shall continue to pay the Settlement Amount by declaration of Statutory Surplus as provided in Section 5.6 of the Settlement Agreement.” I have bolded and underlined the above section because the parties found it important enough that they bolded and underlined it in the Carve-Out Agreement. The effect of this section is to effectively amend Section 5.6 of the 1985 Settlement Agreement with District 97, so that the Village no longer has the option to pay money directly to District 97. Instead, the Village can now comply with its obligations to make payments under the Settlement Agreement only by declaring a Statutory Surplus, which in turn must comply with the TIF law. Through this change, District 200, District 97, and all other taxing districts must receive proportionate shares of the TIF revenue under the settlement agreement. By signing the Carve-Out Agreement, the Village gave up its option to only pay District 97.

I understand that the argument has been made that the Village is not obliged to declare a statutory surplus because there is no surplus in the TIF. This, however, is not a serious argument. Declaring a Statutory Surplus is merely the method by which the amounts agreed to under the 1985 Settlement Agreement are to be paid. It does not mean that the Village actually has a surplus in the TIF. Whether the Village has a surplus is entirely within the discretion of the Village, depending on which redevelopment projects it chooses to support and which expenditures it chooses to make. Neither District 97 nor District 200 would have agreed to condition the money they get on the decisions the Village makes with TIF funds, because the districts have no control over Village use of TIF funds. The whole point of the agreements is to reduce the Village’s TIF revenue, and redirect part of that revenue to the other districts. After its TIF revenues are reduced pursuant to the agreement, the Village then has the discretion to decide whether there is a surplus in the remaining TIF money.

I understand that the Village is facing some serious financial problems, and I believe that the other taxing districts would be be willing to discuss these problems with the Village, and may also be willing to make changes to their agreements in order to help the Village. Given the agreements that are already in place, however, it should be clear that the Village does not have the right to act unilaterally on this matter. Changes to the Carve-Out Agreement can only be made with the consent of Districts 97 and 200. Since the budgets of the other taxing districts are also directly affected by changes to the Carve-Out Agreement, the other districts should also be consulted as a matter of courtesy.

Oak Park taxing districts have a long history of acting collaboratively, looking out for the best interests of the community as a whole. Unilateral action is not a part of that tradition. But if we call upon the best traditions of Oak Park governments and work together, I believe a solution to this matter that benefits all can be found.

Village can’t change how it distributes funds

The Village of Oak Park doesn’t have the legal authority to change the way it distributes TIF payments, says Oak Park Township Assessor Ali ElSaffar.

The village concluded it could pay only Dist. 97 this time, vis-à-vis one of two payment options outlined in the 1985 settlement agreement. The agreement, ElSaffar noted, allowed the village to pay the district outright or by declaring a statutory surplus, the latter requiring them to pay all the taxing bodies.

But the ’85 agreement, he points out, was amended by a 2003 intergovernmental agreement, commonly known as the “Carve-Out Agreement.” The village was seeking to extend the downtown TIF and agreed to pay the taxing bodies more money from the TIF in exchange for their support of the extension. As part of the agreement, Dist. 200 sought to change the payment provision in the ’85 settlement by removing the direct payment option.

In signing the Carve-Out agreement, ElSaffar said, the village gave up the option to pay Dist. 97 directly. He added that because of the agreements already in place, the village can’t unilaterally change its formula for distributing TIFs without the consent of the two school districts and other taxing bodies.

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