October, 2008 Letter:

W. Vollrath writes to the Downers Grove Village leadership about the CBD TIF.

Included below is the table of key financial data for the Central Business District TIF, which, I believe, is helpful in understanding the performance of the TIF now that it is nearly halfway to its termination date.

I think that by most objective analysis, the TIF should be viewed as a success in funding construction of new buildings, a failure in significantly revitalizing the energy and retail health of downtown, and, perhaps most important to my long-standing criticism of this TIF, it has created a large and ballooning debt burden that, I continue to believe, is not close to being covered by increased tax revenues as was the original expectation when the TIF was first proposed.  If correct, that means scarce monies needed for storm water projects, neighborhood infrastructure, staff retention and development, etc. will instead need to be spent on growing debt payments.  As I see it, all this debt bought us an overly expensive parking garage, used extensively by non-resident commuters, and soon to be completed retail, office and residential space, for which there is little demand. 

A few other relevant observations:

Several influential, downtown property owners enjoyed large, windfall profits on their sale of land, at peak prices, to the taxpayers of Downers Grove.  Perhaps you should now ask these individuals if they can somehow return the favor and somehow come to the Village's financial aid.

I am assuming the downtown TIF construction/debt creation is largely complete.  If not, someone needs a cold shower and a strong dose of reality pills.  As Will Rogers once said, "When you find yourself in a deep hole, the first thing to do is stop digging!"

The amateur developers who pushed for a large, multi-use building to go onto the small lot at Maple and Main should never be allowed to again suggest any TIF projects.

The EAV increase of $30 million ($90 million market value) at a cost, so far, of $53 million (Joint Review Board Minutes) or is it $78 million (TIF Annual Reports, See Table) plus another $86 million of private monies (Joint Review Board Minutes) does not strike me as a great investment for taxpayers!

I believe the $53/$78 million plus in TIF governmental money expenditures doesn't even include millions of debt principal and interest still to be paid and which accelerates between now and 2020, while real estate values likely fall further, and then, hopefully, stabilize.  This principal and interest coming due totals over $50 million (2007 TIF Report), while the 2007 year-end TIF Fund balance is under $1 million, and the 2007 TIF revenue was only about $2 million.  Where exactly is the remaining $50 million coming due coming from?  It seems to me there needs to be a major improvement in TIF revenues from current levels if the TIF isn't to be a drain on taxpayers.  I just don't see an average 7-8% annual increase in downtown TIF tax revenues through 2020 as likely, no matter how much the mayor, past Council members, or downtown land owners want it to happen.

If any members of Council wish to talk with me regarding the TIF, I can generally be reached between 9:00am and 9:00pm at [the number listed in the phone book].

Sincerely,   William Vollrath,   Downers Grove

Principal and interest due on TIF debt by 2020 is approximately $50 million.  Since current Fund balance is relatively insignificant, it would appear the TIF EAV and tax revenues will need to roughly double, very quickly, in order to cover the ballooning debt expense and avoid a drain on tax dollars needed for other Village expenses.  That is highly unlikely in the midst of a real estate recession.  The other option, for this TIF financing to work, would be for a massive jump in EAV nearer the end of the TIF life.  That also now seems rather unlikely. 

Please try to better coordinate street paving and street digging by utilities.  Streets around El Sierra were re-paved just a couple years ago, at considerable expense, and now have been widely dug up for the storm water work.

If the last Village Manager really was fired primarily over a grey area concerning her authority to pay bills, all of Council needs to seriously consider its responsibility in mentoring young public servants, as well as reflecting on what oversight behavior is appropriate and what is simply political and destructive!