“Don’t tax you, don’t tax me, tax the fellow behind the tree.” So stated Russell Billiu Long U.S. Senate Finance Committee chairman from Louisiana.

At the 5.13.13 Lake Geneva City Council meeting Tom Hartz, lobbying for the Geneva Lake Area Chamber of Commerce, spoke in favor of keeping the downtown Lake Geneva TIF distinct open, thus taxing all the residents of LG another $2M for 2013/2014. Harz stated “ the chamber board on review of a number of TIF funded projects believes the positive benefits of keeping TIF open far out way the limited benefits of its closure.” One of those projects is extending the ornamental downtown street lighting down Broad Street in front of his business Simple Café and Bakery.  The other businesses in downtown Lake Geneva paid for the said street lights through a special BID tax on their property. But Mr. Harz will “not have the opportunity “as Alderman Wall so diplomatically put it, to pay for them via BID. The cost is about $500K.  Mr Harz is on the chamber board.

The downtown TIF distinct was created in 1995, has cost taxpayers $20M to date, and is overtaxing residents an extra $2M per year to keep open. It has a positive balance of $8M, enough to fund all current projects. To qualify as a TIF distinct the area has to be “blighted”.

The criteria according to TIF law put forth in s.66.1105 (4m)(c):

  • The project “would not occur but for the use of TIF.”
  • “The benefits, on the whole, are worth the cost of the investments made in the TID. The costs to the municipality for the improvements to the district mean that there is less money to spend on other things”
  • “Distribution of long-term benefits from TID. The taxpayers throughout the county, school, and technical college districts will be contributing tax revenue for the projects in a TID. The tax increments paid by the overlying taxing jurisdictions are forgone revenue that cannot be used to fund the delivery of services.”

Clearly the new ornamental street light in front of Mr. Hartz’s business do not pass the “BUT FOR” test, a BID distinct could be extended down Broad Street and used to buy the lights. Mr. Hartz is not the only chamber board member who has property that will not have the “opportunity to contribute.”

Former Aldermen Bill Huntess and Ed Yeager call what is going on in Lake Geneva “TIF abuse”. What is TIF money really being used for in Lake Geneva? During the meeting a few hints came to light.

  • Speedo Condos downtown business owner who was Mayor when the TIF district was created stated. “I supported TIF 100% and I will always stand behind it. The methodology of TIF is you want to keep it open as long as possible, that is the whole point of creating TIF because that is where you get the benefits. IF you can use TIF to do infrastructure work then you can use the general fund to take care of the neighborhoods. Does it cost money, you bet it does. But where is it better spent, LG is a great investment. “Last year the City eliminated brush pick up in the neighborhoods during the summer to sweep the streets more often downtown.
  • Alderman Mott,” we might not know exactly some other project, but things do come up like the tunnel that has to be repaired. We have to take a look at the project that come up that we are totally unaware of that will be in the future.”
  • It is being used to plug holes in the City budget and evade the State Levy cap.
  • Spending on projects within a half mile surrounding the District.
  • Alderperson Helen Kehoe, “Are we spending some money on things we don’t have to have? Yes. But we’re all thinking the same way. I’m against closing TIF.” From the mouth of babes the truth comes out.
  • Alderperson Hill cited the new lights on Broad Street and “a lot of other worthy projects”, wants to keep it open till 2017. Hill is the Council representative on the Chamber Board, or should I say the Chamber representative on the City Council. The “Chamber” is to Lake Geneva as the “Party” to Beijing.
  • Alderman Lyons didn’t seem to understand the purpose of TIF but was concerned about the City budget if it is closed. Wants to keep it open at least till 2017.

Alderman Wall and Hogan ,the only dissenters, made a motion to close TIF which failed. Hill, Kehoe, and Kupsik made motions to keep it open and approve the 2013 TIF budget which passed along party lines.

TIF in this case is supposed to be used to restore “blighted” areas and return the increased tax valuation to the tax rolls as soon as possible. Was LG “blighted” in 1995? Is it now?

Alderman Hogan says there are ” howls of pain from the taxpayers” in Lake Geneva; the tax rate went up 11% last year. “I have an impression we are looking for projects to spend money on, we are not exercising due diligence for the taxpayers of LG. who are having to pay for these projects sight unseen. We are putting a band-aid on our budget through the TIF funding.”

Alderman Wall, “there will always be a project coming up regardless, or someone will dream of one.” He then sarcastically suggested why doesn’t the Council just extend it till 2017 and be done with it; which was totally lost on the Mayor.

The State of California recently had to make hard choices to balance their budget. One of the laws they eliminated was the use of what we call TID districts by municipalities. It was determined that the main beneficiaries of TIF financing were the property owners and developers in the districts, at the cost of everyone else; the “fellow behind the tree.”


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