Sertus decision makes economic sense for Oak Park

Opinion: Columns

Share on Facebook
Share on Twitter
Print

Ray Johnson

One View

These turbulent economic times challenge us to hold the line on the village's share of property taxes while maintaining high-quality services.

There's another challenge: In a recent Public Affairs Council survey, 75 percent of Americans think the level of ethics and honesty in government has gone down over the past decade, and over 50 percent feel the same way about ethics and honesty in business. For shared public/private investments, this is a perfect storm, and it's blowing across the proposed Lake and Forest project.

How, then, do we decide about this project? Some citizens want us to act as delegates, basing our decision solely on their viewpoint. But we are trustees, not delegates. Our decision must be informed by facts and the viewpoints of all of our constituents and other stakeholders. The village held 35 various meetings to gather information and citizen comments. We also closely studied the projected financial returns benefiting village operations, schools, libraries, parks and the business community.

My conclusions are:

  • An additional 270 higher-income households will financially benefit both our central business district and our community as a whole.
  • A consolidated parking management plan for the area near the project will more fully utilize all 588 spaces in the new proposed garage.

The economics make sense:

  • First, there is no direct cash subsidy from the village to the developer.
  • Second, the developer is paying for 288 parking spaces in the proposed development.
  • Third, we replace an aging, financially failing parking garage. The new garage will help generate a projected $1.4 million in annual revenues from property, retail and liquor taxes — not just parking fees — from this $81 million private investment.

This proposed project causes tension because it's situated at the confluence of a world-class historic district, a neighborhood, a park, a commercial district and a major traffic artery through the village. The Downtown Master Plan illustrated these tensions, and we've worked hard to mitigate them as much as possible through site usage, height step-backs, building design and material selection, increased pedestrian traffic in the central business district and additional parking.

Regarding zoning concerns, we must explain clearly the rationale behind the Planned Development ordinance, and clarify that the existing zoning is not a ceiling for development proposals that seek variances.

After careful consideration of these issues, and a full review of the record, I support the $81 million Lake/Forest proposal. Thank you, members of the Plan Commission, for your time and commitment. Although your deliberations ended with an evenly split decision, the record created through the public hearing process was essential and helpful to me in reaching a sound decision for this proposal.

Reader Comments

44 Comments - Add Your Comment

Note: This page requires you to login with Facebook to comment.

Comment Policy

John Butch Murtagh from Oak Park, Illinois  

Posted: January 23rd, 2012 10:04 PM

Hi Time -- I sure agree that a lot of TIF money finds its way to communities that don't need the help -- that's a scam. I don't know enough about TIFs to say I completely lack confidence in the concept (when used properly) but I sure as hell know that I don't trust anything in government that is not available in the public record in detail. The OP TIFs are definitely NOT open to the public.

John Butch Murtagh from Oak Park, Illinois  

Posted: January 23rd, 2012 6:30 PM

Illinois finances are a mess, and they might be 2nd to California in bonzo economics, but there is no way it is not even close to being as bad as California.

Time To Move To Arizona  

Posted: January 23rd, 2012 5:50 PM

@ JBM. I don't trust TIF's. Lack of accountability and transparency. An end-around taxpayers.

Reagan Democrat  

Posted: January 23rd, 2012 5:49 PM

Illinois wasnt far behind Ca when it came to being bankrupt! Taxes have been raised and I still believe there are vendors owed money from years ago from the State.

John Butch Murtagh from Oak Park, Illinois  

Posted: January 23rd, 2012 5:37 PM

To: Time to Move to Arizona - It is interesting that seven of the ten cities with the highest unemployment in Nov. 2011 (Merced, Calif. - 16.9%, Fresno, Calif. - 15.7%, Modesto, Calif. - 15.5%, Stockton, Calif. - 15.5%, Visalia-Porterville, Calif. - 15.0%, Bakersfield-Delano, Calif. 13.4%, Riverside-San Bernardino-Ontario, Calif. - 12.5%) are located in bankrupt California. They are all on the list primarily as a result of declining house values and foreclosures and high unemployment. I draw no relations between California's TIF failures and high unemployment, but it sure is a coincidence.

Enuf is Enuf from Oak Park  

Posted: January 23rd, 2012 5:36 PM

The village projected property taxes for Whiteco for 2006 - 2010 was $6,676,135 - $8,652,276 (comparables approach - income approach). The actual property tax paid for 2006 - 2010 was $1,773,372, or $4,902,763 - $6,878,904 less than projected. Reason for shortfall? Village projections were based on immediate 95% occupancy, when in actuality the occupancy was 23% in 2009 and 79% in 2010. Village financial analysis for Sertus is based on full occupancy by mid-2015.

John Butch Murtagh from Oak Park, Illinois  

Posted: January 23rd, 2012 4:33 PM

Hi Done - I am printing out the documents you recommended from the Reader. The Reader is the most investigative and analytic paper in the Metro Area. I would have read the article anyway, but when I found th quote below on the first page about difficulty of getting TIF info in Chicago, I decided I read the article TODAY , "This is the document we've been referring to as the "shadow budget" because the city puts it together behind closed doors and had previously refused to release it publicly, even though it maps out the use of about half a billion dollars a year in taxpayer money." This exactly what is happening in OP - A Shadow Budget. Thanks for the URL.

Done from Oak Park  

Posted: January 23rd, 2012 4:01 PM

http://www.chicagoreader.com/chicago/the-chicago-reader-tif-archive/Content?oid=1180567 The Chicago Reader archive of TIF-related articles. Fascinating reading for anyone.

Time To Move To Arizona  

Posted: January 23rd, 2012 3:33 PM

The origins of TIF are in 1952 California where local governments turned to this unique mechanism to generate matching dollars in order to qualify for federal urban renewal funding. Local governments in California raised the match money by selling bonds; then they paid back the loans by using the increased tax collections that resulted from the renewal projects they had just paid for. The technique worked. Then in the 1970s, federal renewal money went away, new voter-imposed restrictions (cont)

Time To Move To Arizona  

Posted: January 23rd, 2012 3:33 PM

drastically limited property tax rates (Proposition 13)%u2014and the practice exploded because it was one of the few ways that localities could raise money for renewal development. In 1970, there were only 76 TIF areas in California, but by 1990 there were 658. The practice soon spread to other states: 28 states had TIF by 1984, 33 states by 1987, and 44 states by 1990. Today every state with the exception of Arizona has some form of TIF

D  

Posted: January 23rd, 2012 3:27 PM

Ehhhh, Money makes the world go round. TIF districts divert a certain amount of future year tax dollars and collects them to pay for improvements that the WHOLE community benefits from. It also allows monies to be collected that otherwise wouldnt be in the budget. The taxing bodies that receive the monies have to agree to the terms becasue in the long term it will generate more tax dollars to them(taxing Bodies) than before. TIF's work. Look at DTOP and how revitalized it has become.

Done from Oak Park  

Posted: January 23rd, 2012 2:49 PM

TIF's do nothing but benefit a specified area while ignoring others for the benefit of those who make the decisions. And those certain "TIF districts" drain money that could be better used for the good of the whole. Look at how they are used by Chicago. They have not benefitted areas that need the influx of development while areas that the TIF were set up for get funds diverted to "pet projects". Go to the Chicago Reader website and read the articles they have written on the subject.

Done from Oak Park  

Posted: January 23rd, 2012 2:43 PM

I quote Murtaugh: "Both at the board table and in the press, David Pope said that the return on investment from Sertus taxes (property and retail) would be used for the Greater Downtown Development which faces a TIF fund shortage." Thank you - And there is our problem. The TIF exists because of tax dollars. No tax dollars, no TIF. How about relieving the upcoming General Fund shortage with tax dollars instead of funding a slush fund, which is really what a TIF is anyhow?

Berwyn  

Posted: January 23rd, 2012 2:34 PM

"......because it provides information that leads to informed decisions." Those decision you speak of are made by THE TRUSTEES who were ELECTED TO OFFICE. Just an FYI. :-)

Enough already  

Posted: January 23rd, 2012 2:32 PM

John meet Jim. Jim meet John.

John Butch Murtagh from Oak Park, Illinois  

Posted: January 23rd, 2012 1:24 PM

Enuf - In yesterday's New York Times there was an article by Elizabeth Rosenthal titled "I Disclose...Nothing." There is a statement that captures Oak Park's attitude toward fulfilling the 2009 election campaign slogan of Responsible Government and Transparency. The Quote, "...disclosure is both a citizen's right and a tool to ensure good government and consumer protection, because it provides information that leads to informed decisions." It goes on to say, "Disclosure has often become an end point in the chain of responsibility, and act of compliance with the letter of the law rather than the spirit of transparency." OP does not even attempt to follow the letter of the law, instead it makes up its own disclosure rules and labels them as TRANSPARENCY.

Enuf is Enuf from Oak Park  

Posted: January 23rd, 2012 11:48 AM

@JMurtagh: the answer was provided by Pope in the board meeting that approved Sertus. Although a financial analysis re. the Whiteco project was promised, Pope instead provided his own analysis, claiming Whiteco would've performed as projected except for const. delays and property tax legislation change. In planning, this is called 'uncertainty', and explains why best case scenarios are rarely realized. Pope doesn't account for uncertainty, and thus has a record of failures.

John Butch Murtagh from Oak Park, Illinois  

Posted: January 22nd, 2012 11:18 PM

Hi Enuf - No matter how you figure it, and you are much more capable than me on figuring it, if President Pope plans on pursuing the Greater Downtown there will be strain on all revenues. Without clear information on how much money the TIF can provide until 2018, how successful the Sertus ROI will be, and what the cost is to complete the existing Greater Downtown Plan (2005 version), and with no consideration of additional fed and state revenue, I see nothing but financial fog in the next 7-10 years. Most likely we would not be able to replenish the operating reserve, do major infrastructure work, and no reduction in property tax (a possible residential increase in property tax exists), and would likely to continue with the current debt level at least. I could be dead wrong on my analysis but I have posted it several times this month without response from the village or the board. I have set foundation for the pessimistic scenario. When will the village give us a realistic mainstream or optimistic scenario?

Enuf is Enuf from Oak Park  

Posted: January 22nd, 2012 6:13 PM

Long story short, the village projects (best case scenario) the new L/F Parking Garage to cost $9,169,176 ($8,640,000 for construction plus $300,000 for const. admin. plus $229,176 for debt service). The only village funds allowed to be dedicated to this cost is Sertus property tax revenue collected before the DTOP TIF expires at the end of 2018. The remaining shortfall is to be paid from General Funds. This analysis is from the SB Friedman report, not available to the public.

Enuf is Enuf from Oak Park  

Posted: January 22nd, 2012 5:56 PM

@JMurtagh ... property taxes go into the General Fund, and cannot be earmarked for any specific purpose, unless it's in a special taxing district, such as a TIF. Any property tax from Sertus goes in the General Fund (after the DTOP TIF expires), and cannot be earmarked specifically for Sertus-related village debt. Retail sales tax already goes into the General Fund. Parking revenue goes into the Parking Fund, which as an enterprise fund, is isolated from general operations.

John Butch Murtagh from Oak Park, Illinois  

Posted: January 22nd, 2012 4:04 PM

Both at the board table and in the press, David Pope said that the return on investment from Sertus taxes (property and retail) would be used for the Greater Downtown Development which faces a TIF fund shortage. That sounded to me like Greater Downtown will get priority over resident tax relief. If the return on investment payback is slow, increased taxes or loans could be needed to keep G. Downtown afloat. It is interesting that Ray never addressed any risks associated with the plan. Of course, neither did the board during the approval process.

Q from Oak Park  

Posted: January 22nd, 2012 3:08 PM

Ray Johnson, 75 percent of Americans think politicians lie, and the number is probably higher than that. Obama signed in law that our Military can be brought in if needed to Police all of us. At least Bush denied Cheney's request of bringing in the Troops after 9/11. Your politics are small time, but you certainly have the same qualities what people expect from people who say they want to serve the public.

Q from Oak Park  

Posted: January 22nd, 2012 3:02 PM

Just an Accountant from Oak Park, if your numbers are incorrect, how are you held accountable? There use to be very responsible people who would hold themselves accountable and do the right thing. They would resign!! Now resigning isn't considered, so how are people accountable?

Q from Oak Park  

Posted: January 22nd, 2012 2:59 PM

Ray Johnson, as you say, we are in turbulent economic times, but some how people are going to want to pay for the high income properties, so if that happens, with all of that wonderful tax money being generated, what will you do with it? Find more projects or lower property taxes. That give away property is very valuable where it's located at. Why not sell it? Do you think Oak Park's land has no value? Why do you consider the parking lot reaching its usefulness? Close it if it's dangerous.

Q from Oak Park  

Posted: January 22nd, 2012 2:36 PM

Ray Johnson, no cash is being given, but the land is, and land has value and you are taking money that belongs to Oak Park citizens and giving it away. You also have not stated the obvious, and that is, does Sertus have the money to build? Of course not, they are going to rely on investors, so while you are wasting Oak Park taxpayers money, why not address the most important part of your project. Where is the money???????

Enuf is Enuf from Oak Park  

Posted: January 22nd, 2012 2:29 PM

While Trustee Johnson freely shares his economic views with the citizens of Oak Park, he continues to withhold economic information. The S.B. Friedman economic analysis report of the Sertus project, prepared for the village and paid with public funds, has never been released to the public. Even though it is 2012, the 2010 Annual TIF report has not yet been completed, nor has there been a Joint TIF Board Meeting. Democracy relies upon informed citizenry, not entrusted leadership.

Silly  

Posted: January 19th, 2012 9:15 PM

Its like anything else. Each situation is unique and different. Glad the commissions can put their time in and help the Board gather and process info before making their final votes.

John Butch Murtagh from Oak Park, Illinois  

Posted: January 19th, 2012 8:24 PM

I do.

Silly  

Posted: January 19th, 2012 8:11 PM

Any body know the % the board agrees with recommendations from commissions vs. Not?

Thank goodness...  

Posted: January 19th, 2012 8:05 PM

Thank goodness the VMA is selecting soon, only their hand-picked, VMA vetted candidates are worthy enough to serve. No other OPers, no matter how decent are smart enough, good enough, or have enough free time to serve. VMA candidates are so qualified and intelligent that we hardly need staff at Village Hall. That's it, we could do away with staff to save money but first let's get rid of all commissions. Forestry is gone already, right? Get rid of the Plan Commission, they give bad advice!

Steve Louse  

Posted: January 19th, 2012 10:45 AM

hey steve, way to stick up for your vma group:just a reminder that the next Selection Committee meeting is on Wednesday, October 20th, at the Andersen center at 804 N. Hayes (Hayes and Division). As mentioned before, all VMA members are welcome to participate in the selection process (and any Oak Park resident may join the VMA). If you have any questions, contact Steven Rouse at (708)927-5565 or selections@vma-oakpark.org. You can also read more about the Selection Committee

John Butch Murtagh from Oak Park, Illinois  

Posted: January 18th, 2012 11:40 PM

Earth to Mars - Steve, the board voted not to accept the Plan Commission recommendation re Sertus. So, I am not sure what the use or relevance of the PlanCom report is. Seems to me that if the board rejected the recommendation, it is now just another dusty bunch of paper for the files.

Another Tax Paying Neighbor  

Posted: January 18th, 2012 10:35 PM

Ray has all of our household votes. He has proven himself in and in. The good thing is it seems that most of the commenters that wouldnt vote for Ray are 1 topic voters of which Oak park has few. I so hope Ray makes that move. He would make an outstanding President.

BS  

Posted: January 18th, 2012 10:07 PM

Two votes against Ray Johnson in his next campaign coming from this household. The BS keeps stacking up...

Enuf is Enuf from Oak Park  

Posted: January 18th, 2012 9:45 PM

Plan Commissioner Rouse: according to the Oak Park Zoning Ordinance and IL Compiled Statutes, the correct term is 'planned development', which refers to certain uses that, because of their scope, location or specific characteristics, require more comprehensive consideration of their impact. A PUD, or 'planned unit development', is a legal concept and process subject to various usages, such as housing subdivisions, and not used in the Zoning Ordinance or IL Compiled Statutes.

Steven Rouse from Chicago, Illinois  

Posted: January 18th, 2012 8:02 PM

Thanks Ray. I hope the Village Board finds the Plan Commission recommondations helpful in formally approving the PUD.

Just an Accountant from Oak Park  

Posted: January 18th, 2012 7:36 PM

In the business world, when we make a proposal for a new deal, we generally put forth a financial statement that shows line items of all the projected dollars invested vs. the dollars to be earned. It's called a business plan, and we're held accountable to ensure the actual numbers meet projections. We usually find this process to be the best way to justify whether a "decision makes economic sense".

John Butch Murtagh from Oak Park, Illinois  

Posted: January 18th, 2012 4:35 PM

The letter is an insult to the residents' intelligence. Ray banks on the hope/fantasy that no one in the village pays attention to what goes on at the board table. The letter and the ridiculous vote on the "consent agenda" proves again that he has only one objective in life - to be an "OP star." His vote to take the tree removal approval off the consent agenda became deplorable when he did not even bother to tell the residents why he was opposed. The OP residents have one role in Ray's life -- to get him reelected.

Enuf is Enuf from Oak Park  

Posted: January 18th, 2012 4:18 PM

Ray Johnson previously voted for the Downtown-Lake Street Building Height and Massing Overlay District (Zoning Ordinance, 3.9.4-E.1), which states; "No building (along Lake St.) shall exceed 80 feet in height". In defending his vote for the 204-foot high Sertus Tower, Johnson explained his vote for the Overlay District was intended as "advisory" only. Hey Ray, the Zoning Ordinance (1.3-E) states; "The word 'shall' shall be mandatory, not advisory."

And So It Begins  

Posted: January 18th, 2012 3:57 PM

Ladies and Gentlemen you have just read the first speech (lecture more like) from the soon to be announced next candidate for village president. Well Mr. Johnson, you have once proven to me that you are not ready for president or should you be reelected as a trustee. You have talked down to me and my neighbors, yet again and you have glossed over the fact that the sertus deal is indeed costing the villagers a valuable land asset as well as tax payer funds....even though they it is not"cash".

John Butch Murtagh from Oak Park, Illinois  

Posted: January 18th, 2012 2:11 PM

Sure would have liked hearing the Sertus financial assessment from the consultant we paid to assess it rather than a non-economics schooled trustee.

OP Rez  

Posted: January 18th, 2012 12:49 PM

Well said Trustee, Resident Johnson.

Mares  

Posted: January 18th, 2012 12:44 PM

Tom, don't be silly. Most people receiving Section 8 housing vouchers do not own cars.

Tom from River Forest  

Posted: January 18th, 2012 12:38 PM

While again admitting that I have no stake in this development except having to look at the thing, Mr. Johnson, your justification of this building is why 75% of Americans believe that honesty in government is on the decline. While there is no cash subsidy the village deeded the land that the parking lot is on to Sertus. Also the reason that the developer is paying for the parking is because it will be reserved for its tenants. And who wants to bet against those tenants getting the best spots?

Facebook Connect

Answer Book 2019

To view the full print edition of the Wednesday Journal 2019 Answer Book, please click here.

Quick Links

Sign-up to get the latest news updates for Oak Park and River Forest.


            
SubscribeClassified
MultimediaContact us
Submit Letter To The Editor
Place a Classified Ad

Latest Comments