A Chicago-based watchdog group is skeptical of River Forest’s plans to hold onto its $5 million in saved development funds, set to expire at the end of this year, saying it raises “legal questions” and generally violates the public’s trust.

Facing the prospect of losing decades of accumulated Tax Increment Financing development dollars, River Forest is planning to sign off on last-minute plans to make use of that cash, notably in a proposed development at Lake and Lathrop, and avoid diverting it to the rest of River Forest’s government bodies.

The village is planning to enter into a contract before the end of the year that would commit money to the Lake and Lathrop project without having all the specifics nailed down.

By entering into a contract now, the village hopes to escrow funds from the TIF fund, and avoid having to pay them to local government bodies when the TIF expires in three and a half weeks.

The plan is legally questionable, said Lawrence Msall, president of Chicago-based Civic Federation, but more than that, it betrays the trust of anyone paying or receiving property taxes in River Forest.

“To create escrows or to enter into last-minute contracts flies in the face of the goodwill that is provided for the creation of the districts as well as the future of tax increment financing,” Msall said. “If the perception is that the municipality is creatively trying to hoard unallocated TIF dollars, it will not breed public trust.”

Putting those dollars aside at the last second could create legal problems as well, he said.

“The suggestion of escrowing funds does open up legal questions,” said Msall. “It may or may not withstand legal scrutiny; it may withstand lawsuits from taxpayers or others.”

But River Forest’s village attorney, Lance Malina, said that as long as the contract for Lake and Lathrop fulfills Illinois contract law, it’s a valid way to use TIF dollars.

“A contract creates obligations to pay,” Malina said. “Although the contracts might not be fully performed, the money wouldn’t be counted as a surplus if it was committed.”

There’s no language in the law that governs TIF funds, Malina said, that stipulates how far along a project has to be for it to be a valid project.

“Legally, the question is, is it a binding contract within the period?” Malina said. “If the shovel isn’t in the ground, that’s not a distinction you can tie to anything in the statute.”

Any money that’s not committed from the $5 million when the TIF fund expires at the end of this year would be redistributed to any of the taxing bodies in River Forest that receive property taxes, such as the schools, the library and the park district.

River Forest Public School District 90 will get about a third of whatever’s left in the TIF fund — a chunk of change that would amount to around $1.6 million if the Lake and Lathrop project didn’t come through.

Dist. 90 Superintendent Thomas Hagerman said the schools would welcome that money, and any extra cash they get keeps them from having to ask for more money from taxpayers.

“Any further funds, of course, benefit the district and prevents us from having to go out for referendum,” he said. “We’re looking at the long-term economic picture. We said we wouldn’t go out for another referendum until at least 2014, but any more dollars could push that back.”

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Ben Meyerson

Ben was Wednesday Journal's crime, parks, and River Forest reporter, until he kept bugging us enough to promote him. Now he's managing two of Wednesday Journal's sister papers in the city, Chicago Journal...

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