Economic Incentive or a bad deal for taxpayers ?

The following is from the village’s 2006 CAFR – it is another example of how the village views economic development – in this case we are buying sales tax revenue from a retailer (our presumption is that it is ABT) who is constantly held out as a “victory” for the village’s effort to increase sales tax revenues. ABT had outgrown their space in Morton Grove and needed a new home and Glenview was a perfect location to meet their historical customer base and increase their business. That should have been enough -  but it wasn’t.  Why is the village discounting its sales tax revenues for a business as successful as ABT ?  Dont' get us wrong ABT didn't do anything wrong -  it was the village who

 

ECONOMIC DEVELOPMENT AGREEMENT

In 2000, the Village entered into an economic development agreement with a local retailer

who wished to relocate their operations to the Village. Under the terms of the agreement,

the Village agreed to rebate sales tax receipts to the retailer at a rate of 50% of the Village's

local sales tax (1.0%) above a base amount of $1,000,000. The agreement is contingent on

the retailer’s agreement to maintain their facility within the Village for a period of at least

15 years from the effective date of the agreement. The Village made payments to the retailer totaling $1,305,372 for sales tax receipts in 2006.

 

Source - Village 2006 CAFR

Village to raise its sales tax rate by 50%

From the Glenview Announcements 11-8-07

Sales tax on way up

Trustees also endorsed raising the portion of the sales tax that Glenview as a home-rule community can collect to three-quarter of 1 percent from the current one-half of 1 percent. The vote to enact that hike would be scheduled early next year.

"It doesn't seem like something that's going to hurt our businesses nor will it be oppressive on our residents,"  Pat Cuisinier said.

Maybe Trustee Cuisinier should read the following article from today’s Wall Street Journal: 

Tax and Offend
 

November 8, 2007; Wall Street Journal ; Page A22

Voters on Tuesday faced a grab-bag of local issues and responded with mixed messages for both national parties. Perhaps the one clear lesson is that voters remain as skeptical of government schemes as ever.

In Washington state, $47 billion in transportation spending, backed by tax increases to pay for them, went down to apparent defeat in a referendum by what looked like a 10-point margin as we went to press. Voters in that blue state also affirmed an initiative to strengthen the state's supermajority requirement for raising taxes, while rejecting a measure that would have made it easier to raise school taxes. Across the country in North Carolina, county-level referendums on imposing a real-estate transfer taxes lost everywhere. And in Indianapolis, Republican Greg Ballard defeated the incumbent Mayor in a major upset. One of his best issues was opposition to rising property taxes.

Even in bluer than blue New Jersey, voters rejected a plan to borrow $450 million over 10 years to fund stem-cell research. With a $3 billion deficit, $33 billion in state debt and some of the highest property taxes in the universe, residents seemed to feel that more borrowing was merely feeding the spending addicts in Trenton. Voters also rejected a plan that would have "dedicated" revenue from a recent sales-tax increase to property-tax relief. This probably reflects good common sense -- with spending out of control, shifting revenue doesn't address the underlying problem. At the same time, New Jersey overwhelmingly voted Democrats back in control of the Legislature, which reflects the state's hapless Republican Party.

And speaking of hapless, Virginia Republicans lost control of the Senate for the first time in 12 years, and were all but wiped out in Northern Virginia's Fairfax County. Virginia Republicans have lost their way by embracing the tax and spending agendas of successive Democratic Governors, and the result has been more and more Democrats in office. Perhaps they should try to stand for something other than bashing immigrants.

The GOP also lost big in Kentucky, where voters showed scandal-tarred Governor Ernie Fletcher the door. Mr. Fletcher made the mistake of pardoning aides implicated in a personnel kerfuffle at the beginning of his term. The scandal was largely a case of criminalizing politics from the start, but what smacked of abuse of power in response did not sit well with voters in this year of public discontent.

Further South, Republicans cleaned up in Mississippi, continuing a decade-long trend away from one-party Democratic rule. Haley Barbour was re-elected as Governor and all but one statewide office went to the Republicans. GOP success in Mississippi reflects voter approval of doing what Republicans do best -- fiscal conservatism and a major tort reform, combined with a sense that the Barbour administration handled the fallout from Katrina with competence and efficiency.

Taken together, these results paint a picture of voters wary of politicians looking for new pots of money to spend. Democrats running next year on a platform of taking more from taxpayers, please take note. Republicans in Congress have damaged their credibility on fiscal responsibility, but voters are not in a trusting mood when it comes to government spending, regardless of which party wields the purse strings.

Perhaps the biggest disappointment came in Utah, where voters resoundingly voted down a statewide school vouchers plan passed by the Legislature and signed by the Governor. This reflected a huge misinformation campaign by national teachers unions about the effect on public education. But Governor Jon Huntsman, who campaigned for office as a supporter of vouchers, deserves some of the blame for having bowed out of the referendum debate early on. Business was lukewarm as well. Voucher proponents are going to have to rethink their political strategy, because suburban voters still seem to believe that their own public schools are fine, even if everyone else's are rotten.

Overall, voters seemed to enter the voting booth in a skeptical mood Tuesday. If that attitude extends toward the many gauzy promises that Presidential candidates will be offering next year, so much the better.

Glen funds being used for further village development

Here is the president's letter from the November 2007 village newsletter. It states in the clearest terms the political and philosophical context for the village's economic development. What is interesting about the letter is what is omitted. It talks about taxes in a two dimensional way - property and sales taxes which account for 55% of village revenues. The village does not talk about the consumption taxes you are paying each month on you utility and telephone bills. The other broad strategic action that village has implemented is also not discussed. This is the village's decision to use the Permanent Fund which was created from the village's land sales commissions at the Glen to fund further non_glen development in the village.This is where the money for the Dominick's purchase came from. We do not recall that this was ever the spirit or intent of this fund. Now the politicians have a "pot" ( their term) of money to fund their development aspirations. Is this something you favor ? 

Glenview is fortunate to have a vibrant and active business community; in fact it serves as home for almost 3,000 businesses! This year, to further strengthen this community, the Village enhanced its Economic Development eff orts, and brought a parttime Economic Development Coordinator on board.Why did we decide to invest additional resources in this area?At its base, the answer is simple: to maintain and strengthen our tax base. In 2007 alone, sales taxes will bring about $18.4 million into the Village Operating Budget -- that’s 40 percent of its projected revenues of $45.86 million (only 15 percent of operating revenues are projected to come from property taxes)! These dollars support the work the Village does every day. Police and fire protection, emergency medical services, snow plowing, tree trimming, street repairs, inspections and more -- all of these services rely heavily on sales tax revenue. And a strong sales tax base can help moderate property tax increases.We’ve been fortunate that Glenview has att racted so many fi ne commercial, offi ce, and industrial businesses. But with tax revenue fl att ening and municipal

expenses continuing to rise, it make sense to begin taking a more strategic approach to enhancing our business mix. We’ve already invested time and energy into land use planning for The Glen, Downtown Glenview and the Milwaukee Avenue corridor. Through our new Economic Development effort, we hope to take these plans from the page to reality. On the flip side, businesses appreciate working with municipalities that take the time to understand their needs and facilitate their eff orts to set up shop in town.So what, precisely, will our Economic Development Program focus on in the coming year? Here are a few highlights:

• Establishing a business retention and outreach program Build awareness about our Milwaukee Avenue and Downtown Plans.
• Strengthening the Village’s partnership with the Glenview Chamber of Commerce.
• Helping to guide the redevelopment process for the former Avon site (at Golf and Waukegan) and the former Culligan site (at Willow and Sanders). Because these are large parcels, it is important that the Village play a major role in their redevelopment.
• Identifying business or developer interest in the former Dodge Dealer site on Waukegan Working to complete build out of the remaining 17 acres in the Prairie Glen Corporate Campus at the north end of The Glen.

Last month in this space I focused on the Board’s role as stewards of your taxpayer dollars. Proactively seeking to build our business community is an important way that we can continue to ensure the delivery of quality public services.

WHAT WOULD NORTHBROOK DO ?

This is fair question since they just had their own major development going on at Willow Festival. This is located on Willow Road and includes Whole Foods, Lowe’s, Best Buy and a planned hotel. They have left the development to the market – no TIF – no developer incentives – no land purchases.

The following is an excerpt from the village's TIF Retirement plan, what stands out is the willingness of the village to subsidize developers and private interests when it is probably not even needed. We say this because Northbrook has just seen a massive development at Willow Festival and they did not need a TIF or interest free "loans" to developers or incentives to get tenants into commercial office space. 

 " Developer Incentives To date, four cash incentives have been approved from the TIF district to enhance development within The Glen. They include:  􀂾 $76.5 million to OliverMcMillan for infrastructure and building improvements at The Glen Town Center including the public parking decks, parks, sidewalks, and streets ($76.5 million has been paid in full); this incentive was offset by a land sale price of $38,627,000 which consisted of $21,627,000 cash at closing and two revenue-sharing agreements in the amounts of $12 million with OM and $5 million with Von Maur  􀂾 $2 million to Anixter for their corporate headquarters relocation ($950,000 has been paid through 2006)  􀂾 $637,500 to Beltone for their corporate headquarters relocation ($153,750 has been paid through 2006)  􀂾 $2.2 million to M. E. Fields to mitigate soil conditions and provide stormwater detention for a Jeep/Dodge/Chrysler automotive dealership (payments have not commenced)  Additionally, a $1.4 million loan was made to Thomas Place to assist in providing an affordable senior housing complex. Also, an additional contribution to OliverMcMillan in the amount of $750,000 was made in 2005, which must be repaid not later than August 16, 2008. Finally, it is possible that additional incentives will be necessary to attract high density corporate headquarters tenants to the Prairie Glen Corporate Campus. "    

We will get into the Von Maur deal in separate post for now let's just focus on the commercial real estate incentives. We gave Anixter $ 2 million and  Beltone $ 637.5m. We are now considering further incentives for the new building being erected at the southeast corner of Willow and Patriot. Who benefits from these incentives the most ? The answer is the developer in this case Catellus which was acquired by a company named Prologis. In their latest financial report Prologis announced for the 9 months of 2007 they had earning before interest, taxes, depreciation and amortization (EBITDA) of $ 1.5 billion with $34.4 billion in assets owned. Why in the world is Glenview giving subsidies to the tenants these guys are bringing into their buildings ?

Was the Dominick's purchase a trap for village taxpayers ?

The village is moving full steam ahead with its $6.5 million purchase of the Dominick's at Glenview and Waukegan Roads. The lessee for the property is Dominick's owner Safeway Corporation. Here is where the village might have boxed themselves in. Safeway has a net/net lease that runs until 2012. If they wanted to they could sublet the property to someone else during that time. Glenview does not want this since they have their own  view as to how that property should be developed. Here's the catch - Safeway has the right (with 180 days notice) to cancel the lease in each of the remaining years of the lease. The cost for canceling the lease in 2008 is $ 280,000 which is about what Safeway would spend in 2008 for the lease rent of $ 156,000 plus property taxes - to all taxing bodies - of about $ 115,795.76 plus insurance. 

The question is how much of a "premium" will Glenview pay to get Safeway to terminate the lease. Given this option why would Safeway continue to pay these expenses on vacant store for the balance of the lease unless they see another option. 

All of this could have been easily avoided if Glenview had made it a condition of the purchase that the sellers deal with Safeway. Glenview will tell you the sellers would not entertain this notion (which is exactly what you would say if you were them) - if that was the case then Glenview should have walked away. Now we are in the position of being a strategic (vs. economic) owner of a property that Safeway knows we really want to develop. What do you think Safeway is going to do ? Let's hope for the best. 

Glenview's per capita debt has soared over the past ten years

In 1997 the per capita debt for village residents was $ 1891.15 now it is $3500.40 that is a 85% increase during a time when the village collecting more tax revenues than ever before 

Source : Village of Glenview 2006 CAFR 

Something to forward on to others

Soon you will living in the Naperville of the Northshore 

The following quote is from the village's comprehensive plan 

"Glenview's projected population growth is unmatched by any other comparable community. Naperville comes the closest with a projected rate of 21.2%, while Wilmette and Park Ridge both anticipate negative population growth."

Our politicians are doing everything they can to make sure this happens, Just look in your mailbox at the village report you just received. In the president;s letter on  page two you will see exactly what the plan is. We are going to use the the "pot" of money from selling land at the Glen to further develop the village. Unlike Naperville we do not have cornfields to plow over therefore we can only go vertical which means 4 and 5 stories of condos lining Glenview and Waukegan roads with stores in the first floors. 

 

This is going to be a great deal for developers and lousy one for you. That is unless you like traffic. 

The village's  argument goes something like this we have to keep developing to support our expenses. We are doing this in a way that is good for you because we are growing our sales tax base (who do they think pays the sales tax anyway) . While this certainly a path that can be followed and we are rapidly heading down that road. There is another solution and it is pretty simple. Stop spending so much money and stop increasing the village's debt. This simple solution is attainable when you consider that the village has been collecting more tax revenues then ever and spending every penny of it as fast they can while at the same time increasing our debt top record levels. 

 

There is not another election until 2009 -  if you wait until then chances are it will be too late. Let your voice be heard - write the politicians and tell them what you think about becoming the next Naperville. Post comments on saveglenview.blogspot.com   -  get involved or get ready for the bulldozers as they come down Glenview Road .

Please forward this message on to others that you think might be interested. 

Village Plan to Build Government Supercenter

See article below regarding the village's plan to build another giant facility like the police station - what is key is the last line which says the community supports this project - Do you?

 
From Chicago Tribune - Monday November 5, 2007
With the administrative buildings for the village of Glenview, the Park District and public schools aging and in need of renovations, officials say they could save taxpayers at least $4 million if the entities were housed under one roof.

The decision to combine the offices hasn't been approved, but the idea has the support of several key officials, and a committee has been formed to study the potential merger.

"We see it as a more efficient use of taxpayer dollars," said Gerald Hill, superintendent of Glenview Public School District 34. "It would be a good way to create more space."

The biggest savings would be in planning and construction, said Don Owen, Glenview's director of capital projects.

Also, residents who need to pay a water bill or want to sign a child up for swim lessons could take care of both at one location.

The likely site for this joint administrative facility is on vacant land at what the village calls its public campus, near the new Glenview police station, 2500 E. Lake Ave.

Building separate administrative centers would cost Glenview taxpayers at least $23.7 million, Owen said.

With a combined facility, the staffs could share a lobby, bathrooms, parking lot, and meeting and conference rooms. The joint facility near the police station would be much smaller and would cost $19.5 million, according to village data.

Complaints regarding the inadequacies of the three administrative buildings include lack of space, leaky roofs and outdated electrical, heating and cooling systems.

Some village employees work in one of three trailers because space at Village Hall is limited. Village spokeswoman Janet Spector-Bishop said buckets are set up inside Village Hall when it rains, and she has seen mice scurry across the floor.

Chuck Balling, the Park District's executive director, said the offices for the district's 25 administrative employees are inefficient and need total renovation.

Hill said the 1970s-era school administration building, at 1401 Greenwood Rd., would have to be renovated to provide programs for children and early-childhood education.

The village, park and school boards would need to approve the joint facility. The voting would follow the completion of the committee's study, which is expected to continue through the end of the year.

Officials said feedback from residents has been favorable so far.

"This is something the community is strongly behind," Owen said. "All three agencies have outgrown their facilities. The question is: Do we put money into these old buildings, or do you try to look at the benefits of a combined facility?

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