LAKEWOOD – Despite concerns that an agreement designed to prevent a threatened lawsuit opened Lakewood taxpayers up to risk and would lead to Woodstock School District 200 carrying more of a tax burden, both the village and the school district approved the agreement Tuesday evening.
The approval comes nearly a day to a year after the village of Lakewood created a tax increment financing district centered on Routes 47 and 176 to spur economic development.
The TIF district works by freezing the property value of the school district – and every other taxing body – and collecting taxes on and then putting the taxes collected on any new value into a special fund to be used within the TIF district’s boundaries.
This raised the concern for district officials and others that the school district would lose out on new revenue while potentially having to educate any students that move into the area, a concern the agreement approved Tuesday is designed to address.
The intergovernmental agreement would hold the village responsible for reimbursing the school district at least $8,680 for each student residing in the TIF district, and in return, the district would not pursue a lawsuit, the agreement said. The baseline number, which is how much on average the district spends with local property tax revenue to educate a student, would increase each year the TIF exists by the rate of inflation as determined by the consumer price index.
That reimbursement could be paid for using funds accrued by the TIF as allowed for under state law, but when it doesn’t, the village would have to find the money elsewhere.
That worried at least three Lakewood trustees: Paul Serwatka and Kenneth Santowski who voted against the agreement, and Jeff Iden who abstained.
“I’m not worried about the six of us,” Iden said. “I’m worried about the future board and their ability to deal with the situation and make the right decision.”
The future board would be the one making the call on whether any development that occurred in the TIF made sense financially for the village, Village Manager Catherine Peterson said. The area is zoned commercial, so any residential development would require board action.
Serwatka proposed eliminating any potential risk from an agreement or lawsuit by doing away with the TIF district altogether.
The District 200 School Board approved the agreement with a 5-1 vote, the sole dissenting vote coming from Carl Gilmore, who cited “potential uncertainty.”
A few residents spoke against the deal, questioning different aspects of the TIF, from whether the TIF is justified to whether the decided upon amount of reimbursement laid out in the agreement will be sufficient to cover potential losses.
Before the vote, Board President Camille Goodwin said the agreement “reduces or may even remove” the potential inequity of new costs versus new revenue if the TIF produced more District 200 students.
She urged the board to vote in favor of the agreement after noting the uncertainties about both litigation costs and success.
“Our choices are between a guarantee that covers the cost of student education at a reasonable level versus the uncertainty of results and cost of a lawsuit,” Goodwin said. “We have a duty to the taxpayers of this district to manage their funds in a fiscally sound manner.
“I do not see authorizing a lawsuit when we have this negotiated agreement as good management of those funds.”
She also noted if the village had voted down the agreement, the district’s attorneys could have filed the lawsuit Wednesday.