Has Geneva TIFed Away Both Net Tax Revenue and the East Side CVS Pharmacy?

What does a Geneva developer get as perks with a TIF or LIHTC grant? Need a simultaneous Special Use and a bunch of zoning Variations, reliefs, deviations, and “winks and nods?” These can be yours as bonuses for agreeing to accept free Geneva taxpayer money.

Former Illinois House Speaker Mike Madigan and Chicago Alderman Ed Burke have made tentative reservations at Club Fed due to influence peddling. What service did they hawk? Lowering property tax levels was their main stock and trade. Under the “Geneva Way” of the last couple of decades, millions of dollars changed hands via a Tax Increment Financing scheme coupled with sales tax rebates and even land gifts. By accepting a Tax Increment Financing gift, a developer receives, free of charge, the most valuable aspect of the TIF Grift: a greased path to any desired zoning or code interpretation, a building permit, including an occupancy permit as frosting on the cake.

CVS Pharmacy’s corporate plan calls for closing about 1,000 of its 10,000 stores by 2024. What CVS Stores Are Closing? Changes Cost Store $1 Billion (marketrealist.com) CVS has said it will focus on a store for closing based on its proximity to its other stores and on its lower profitability. A newer CVS in St. Charles is kitty-corner from Geneva’s Walgreen Pharmacy at Bricher and State Rt 38. Another convenient CVS Pharmacy is available to Genevans in the Target on Kautz Rd. and Rt. 64.

Take the Geneva Pharmacy at 501 East State as an example of the City of Geneva’s penchant for giving away money while raising homeowner taxes. Pharmacies were not a permitted use in the B3E Zone where 501 East State is located. Only certain low patron volume “specialty retail” uses were permitted. The reason for this was that B3E was created with the stated purpose of creating a one-lot deep buffer between Route 38 and the abutting residential use. Low-volume offices and specialty shops were allowed. This protection for homeowners posed no problem for the Geneva Pharmacy developer. The Geneva City Council simply “spot zoned” 501 E. State to allow a pharmacy. Other perks were thrown into the pot, such as an electronic sign and vehicle access to Woodlawn Street that has no associated pedestrian access. Microsoft Word – City of Geneva Amendment Narrative.docx Because an alderman lived just north on Woodlawn, the pharmacy drive-through was nixed (so far), unlike in the case of the nearby Dunkin’. (To be fair the alderman in question also voted against the Dunkin’s drive-through but the mayor broke the tie that should have killed it.)

CVS purchased its East Side Drive at State St. site in 2002 for $1.875 million. The CVS property tax peaked in 2014 at $54,375 and has slowly fallen to $51,825. The first year for payment into the Tax Increment Financing Fund (TIF2) was 2004 when the City received about $18,000. The School District received $16,000.

2021 East Side Drive CVS Property Tax Distribution

The City of Geneva congratulates itself periodically for its self-declared TIF “successes.” Below is one such City document for CVS issued in 2019. But some obvious smoke and mirror obfuscation lurks just beneath the surface. The total “public” investment was ~$300,000 when considering the TIF grant of ~$125K and the sales tax rebate of $175K. The TIF statute requires a determination that “but for” the TIF grant, the project would not have been built. Is it reasonable to believe that the whole multi-million-dollar project would have been shelved “but for” the $125K of TIF funds?

The City incomprehensively claimed that the “Ratio of Public to Private Investment” was “6.25.” However, {($172,000 plus $124,879) divided by $3,375,000}, is about 0.09 (the $172K sales tax rebate was apparently ignored as public investment.) The “but for” requirement is more like “but what???”

Here is the crucial point: according to the Geneva Township Tax Assessor’s database, CVS paid $1,875,000 for the CVS parcel in 2002. But the “Base EAV” for the TIF was set at $322,341. Now, a taxpayer might ask: How does a developer pay $1,875,000 for the parcel alone in 2002, build a $2+/- million-dollar building, and end up taxed on a total “fair cash value” in 2004 of $1.7mil? The property tax total for CVS in 2004 was $40K on its $3.7 mil “home.” CVS paid $15,000 to Geneva School District 304 in 2004. I paid $4700 to the schools on my home with a “fair cash value” in 2004 of $295,000, and I had a homestead exemption.

The Nelson home property tax has gone up steadily since 2014 (as it always has) without significant capital investment, even with the added benefit of a senior exemption. CVS’s property tax has steadily declined since 2014.

“ArLou’s Liquors” (a contraction of “Arlene and Louis Lencioni), the “Before” in the picture, paid a hefty sales tax on its products. About 76% of CVS’s revenue is from prescription drugs upon which ZERO local sales tax is paid. CVS’s property tax has been steadily declining for eight years.

Below is the property tax bill for CVS for the year 2004. The City of Geneva deposited ~$18,000 in its TIF2 slush fund. This represents a 14.4% annualized return on the $124,849 investment. By 2021, the TIF slush fund collected $24,637, for an annual return of about 20%! TIF’s are a license to steal from School District #304 homeowners, who must pay most (70%) of the $18,000 difference.

Now consider the poor Geneva taxpayer. Who made up the difference for the hundreds of thousands of dollars diverted from the other taxing bodies by the CVS TIF grant alone (primarily School District #304, which receives 70% of total property taxes)? If District 304 needs more money to pay teachers who face the same runaway inflation as everyone else, it must comply with PTELL What is a PTELL Referendum and How Does it Work? | The Civic Federation. If an addition is needed for a school to accommodate students from a 250-unit LIHTC affordable housing project, Geneva School District 304 must pass a referendum.

Where can a Geneva taxpayer make an investment like a TIF grant that pays 20% per annum (which would be taxable to the taxpayer but is not to the City of Geneva politicians who can use the money for their personal political agendas.) The City can pass the money along as salaries to its paid staff which doles out the developer perks through “administrative” largess in the form of reliefs, deviations, and “over-looked” ordinance violations.

Per capita, Geneva had more pharmacy jobs in 1960 when a half dozen drug stores dotted the downtown and elsewhere. In 1960 the half dozen competed against each other on a level playing field. Now TIF tilts the pitch. CVS corporate revenue is 76% generated through prescription drugs that do not generate sales tax revenue. I suspect the new Geneva Pharmacy at 521 State St has an even higher percentage of its revenue from drugs.

In the U.S., prescription drugs are almost always exempt from sales tax. The exception is Illinois, where prescription drugs are taxed at the state level, but at a reduced state rate of 1%. All drugs (prescription and nonprescription) are tax-exempt at the local level. Is prescription and nonprescription medication taxable? – TaxJar

If Geneva’s East Side Drive CVS closes because of the taxpayers’ gifts (spot zoning, etc. plus TIF grant of $93,000) to the Geneva Pharmacy Geneva OKs two TIF projects worth nearly $200,000 (dailyherald.com) which subsidized it, it would mark another colossal mismanagement by the Mayor and City Council. These are the same people who invested heavily in coal-fired electrical generation via a long-term “take or pay” contract with NIMPA. In addition, Geneva’s TIF and LIHTC shenanigans have led to numerous Open Meeting Act violations and other frauds, such as allowing prohibited retaining wall encroachments with a wink and a nod, colluding to skip mandatory IDOT permits, and filing fraudulent documents with the Kane County Recorder of Deeds.

This is the 2021 property tax bill for 501 E. State Street, now the home of Geneva Pharmacy. Note that the TIF2 payment is about double the school tax. All the increment in EAV since the creation of TIF2 has been due to appreciation in value, not capital improvements. In fact, the renovation for the pharmacy creation included the demolition of a significant part of the existing building. Did the $93,000 TIF gift plus the spot zoning change and other perks justify the effects on the residence immediately to the north? “But for” the customized, made-to-order zoning change, this development could not have happened. A Geneva homeowner should not be deprived of the protections afforded by the Special Use Permit requirements by made-to-order zoning on a case-by-case basis for the benefit of a favored entity. This is unethical and perhaps even illegal.

Geneva must stop being just another non-transparent Madiganistan before it taxes out of town all but the wealthy and the politically connected. The ochlocracy created by Geneva’s entrenched mayor, his clique of political minions, and his deep state hand-picked bureaucrats must not be allowed to continue to occupy City Hall.

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