Terry and the TIF:
Terry O’Neill uncovers Walworth County Directive ending the TIF (as we know it) in 2016.
From its inception until today, Lake Geneva’s Tax Increment District #4 (TID #4) has been cloaked in secrecy and riddled with its controversial use. Although the TIF tax is not listed on any property taxes, it is there. It is concealed as part of the school tax, county tax, city tax, library tax, etc. It is hidden within those taxes because the Wisconsin State Constitution only permits taxing property for a few items of which Tax Increment Financing is not one of them. So a TIF tax on property is a legal sham, adding that same TIF tax to taxable items provides a legal way to perform the sham.
TID#4’s deception started with the construction of the Cove and Meridian Hotel (now the Bella Vista Suites) which were approved and in process before TID#4 was approved. Yes, it was a private investment initiated before TID#4, that was responsible for those millions of dollars of increased TID#4 values, not TID#4. Even today (except for inflation) they resulted in the largest increase in assessed TID#4 values. However, because the increase in property values occurred after the formation of TID#4, it artificially made Lake Geneva’s TID#4 look like the poster child for Tax Increment Financing (TIF) districts, as well as significantly increasing the TID#4 tax on the local area residents, which is on its way to $40 million.
As the city approaches the closing of TID#4, the deception continues.
In March of 2015, Former Administrator Jordan stated that the city had spent $24,020,246, and was within $300,000 of the maximum amount of TID#4 money that the city can spend. However, either prior to Mr. Jordan’s statements, or shortly after it, the TIF financial records were altered to create an extra $3.4 million in TIF#4 spending. Then to add respectability to the altered TID#4 financial data, the city hired Schenck (the city’s auditors) to review the data. In that TIF data, the city created additional pre-2009 TID#4 expenditures of $3.4 million dollars over the TID#4 data, that the city had previously supplied to the TIF board to receive TID#4’s amendment #3 approval.
Because of the way in which TID#4, amendment #3 is written, adding previously non-recorded expenditures to pre-2009 spending, increases the amount of TIF#4 money that the city can keep when TIF#4 is closed. It also increases the total amount of TID#4 money that the city can spend on TIF projects (WOW!!! A double win!) [Note: Schenck wisely disclaimed responsibility by saying that the city was responsible for the accuracy of the figures, not Schenck.]
This move by the city increased the total amount of TIF#4 money that the city can spend from $24 million to $27.4 million, and by adding previously not recorded pre-2009 liabilities to TIF#4, it also enables the city to retain an additional $3.4 million when TIF#4’s closes. This financial move was forecasted by a statement in the city audit that reads:
From 2014 city audit page 48—Since the creation of the above TID, the City has….recorded eligible TID project costs in other funds of the City. The foregoing amounts are not recorded as liabilities in the TID capital fund but can be recovered by the City from any future excess tax increment revenues. The intent of the City is to recover the above amounts from future TID surplus funds, if any, prior to termination of the respective TID’s.
The validity of these TIF liabilities may be hard to verify, because the 1995 to 2008 period is beyond the city’s seven-year record retention policy. With some exceptions, the policy permits records over seven years old to be destroyed. Since the detailed receipts regarding these expenditures are 10 to 20 years old, it is suspected that they are being securely stored awaiting burning in Mr. Jordon’s backyard, in a waste management landfill. County administrator David Bretl, who in collaboration with Lake Geneva officials made a proposed plan for closing TID#4. In that plan it includes the additional city spending of $3.4 million on TIF#4 projects. Some of that money rightfully belongs to Schools, college districts, etc.
If you or I took money, or gave away money, that rightfully belonged to the schools or colleges, then we would be spending time in prison, but not Lake Geneva’s city officials. They do it with impunity and get away with it. Resolution 15-R55 (which mirrors the proposed plan except for the actual closing of TIF) approves the City’s spending of an extra $3 million in TIF#4 money and at the same time keeps the rightful owners quiet by giving those taxing bodies an early $6-million-dollar advance refunding payment. The other taxing bodies, who seem to think “A bird in the hand is worth two in the bush.” are keeping quiet and looking the other way while the city of Lake Geneva takes a few extra million from TID#4. But do those other taxing bodies not realize that while the city is getting more than an extra $3 million to spend on TID#4 projects, it will also be keeping an additional $3.4 million out of the TIF fund for itself. That is a $6.4 million TID#4 windfall (swindle fall) for the city.