City of Geneva Capital Spending Budget

As Usual, More Questions than Answers about the Rules of the Shell Game: The Dunkin’ Shuffle and The Emma’s Landing Grift

The City of Geneva’s annual budget document is not an audited financial report. The budget is a planning document. Still, it provides insight into the City’s priorities and planning prowess.[1] The 148-page document contains not a single explanatory footnote, and the puzzling entries and ommissions are plentiful.

FIGURE 1: City of Geneva Budget Summary

A recent Brenda Shory report in the Kane County Chronicle correctly highlights capital spending as a significant component ($14 million) of the FY 2024 total budget, which is 13% higher ($128mil) than FY2023’s $113mil total. And renowned economists debate where inflation comes from? So, an examination of the Capital Projects Funds is in order. “The budget plan proposes more than $14 million in capital projects.” [2]

First, please raise your hand if you understand the ~$75K in the “Foreign Fire Insurance” revenue line. This is a classic Illinois “where’s the peanut” tax. A non-elected “Board” is empowered to expend Foreign Fire Insurance Tax proceeds for the “maintenance, benefit, and use of the Fire Department.” This Board cannot expend tax proceeds for projects not given budget approval by the City Council. The City Council cannot authorize the expenditures of tax proceeds for projects not approved by the Board.

Consequently, the system requires the City Council and the Board to mutually agree on the expenditures. A more transparent line-item title would be “Firemen’s Slush Fund.” Some municipalities have declined to levy this tax because of the “shared” power with a non-elected board. Geneva keeps its snout in the Fire Insurance trough.

As seen in FIGURE 1, Geneva’s Tax Increment Finance districts’ budgets and actual revenues are mystifying. Take TIF #2, for example. The payments for FY years 2021, 2022, and 2023 are $258K, $251K, and $266K [3] are pretty much in line. The 2022 budget called for $992K in TIF2 revenue. The superficial explanation for this is simple if you understand that the East State Street [Capital] Improvement Project has been slated to begin “next year” every year for almost a decade. Of course, the start did not happen again. And about $1.5MIL in Federal CMAQ grant money is sloshing around in the TIF #2 slush bucket. That money appears and disappears like a rabbit in a hat.

Where was the extra $750K that was budgeted stashed? TIF #2 expires this year, yet $852K is budgeted in 2024 and forecasted at $746K in 2025. How does an expired TIF generate $746K? The two TIFs combined had a $2,419,650 revenue “miss” for FY2022. What happened? Where is the footnote that explains this smoke and mirror exercise?

Before leaving page one of the budget, another question is, where is the revenue from SSA #34? This is the Special Service Area for Emma’s Landing. Remember the non-factual “Fact Sheet” the City of Geneva promulgated, which stated that the property tax on Emma’s Landing would be paid:

“Question: Do affordable housing developments pay real estate taxes? If so, are affordable housing developments assessed at the same rate as market-rate developments? Answer: Affordable and market-rate developments are taxed at the same rate as determined by the Geneva Township Assessor.” [4] FACT: LIHTC projects like Emma’s Landing are taxed under an income-based algorithm that results in the actual tax rate of about 1/3rd of the normal” “EAV” assessed valuation algorithm rate. Emma’s Landing passes two-thirds of its EAV along to the rest of the township taxpayers. Of course, zero rates (see Figures 2 and 3) are 100% lower than your property tax rate.

Another example is the Dunkin site at the corner of Crissey and Route 38. The Dunkin owner paid $715,000 for the two PIN number property in 2019. In 2018 the two parcels were assessed at a value of $336049+$103, 411, or $439,460. In 2021 the assessed fair market value was $390,343+97,717, or $488,060, after spending at least $150,000 on remodeling, equipping, repaving, lights, etc. The $850,000 investment was assessed at less than $500,000. The tax bill went from $10,532 to $10,972.60 on the parcel with the building. About 20% of the tax money went into the TIF #3 slush fund bucket. The property was sold for unpaid taxes and then redeemed. This is a mess of Burnsian proportions and will only worsen. Here is a copy of the latest tax bill for one of the Dunkin parcels:

Here is an example downloaded today of a tax file for one of the Emma’s Landing Planned Unit Development affordable townhome parcels:

FIGURE 2: Property Tax Information for Emma’s Landing PUD Lot 3. The dollar amount on Parcel Number 12-08-225-004 is $576,000. But that number was the sale price of the entire parcel, not just PUD LT 3. However, the above file shows the “Property Class” as “8000-Exempt.” The “Tax Status” is listed as “Exempt.” The total tax is given as $0.00.

Below is what pops up when you click on the green box “print tax bill” in the Geneva Township Assessors site for the parcel 12-08-225-004 described above.

Figure 3: The result of clicking on the green “Print Tax Bill” in Figure 2.

Here is a link to the statute that is used to calculate the Illinois Property Tax for Section 42 Low-Income Housing Tax Credit (LIHTC) Projects:

I suspect that none of the ten Geneva City Council Members understood what they were doing when they passed the Ordinance that created Emma’s Landing. At least, I’d like to believe this was the case. The alternative assumption is almost unthinkable. According to records in the public domain cited here, Emma’s Landing did not receive a property tax bill for 2022. The City sold the property in July 2020 for $576,000. The Illinois Housing Development Authority was duped by the City and Burton Foundation into believing the property was donated. (11831 was the IHDA file for Emma’s Landing application – see document below obtained via FOIA from IHDA.) This “donation” ruse raised Emma’s QAP Score in the competition for IHDA grant money. I’d like to believe that the motto “If You Are Not Cheating, You Are Not Trying” is not Geneva’s.

With apologies to the Scottish Bard: “Politicians’ inhumanity to taxpayers makes countless thousands mourn.”

[1] _01172023-2075 (geneva.il.us) The 148-page “FY 24 Draft Budget & FY 25 Budget Planning.”

[2] Geneva aldermen expected to approve $128.3M city budget – Shaw Local

[3] Geneva’s fiscal year ends April 30, so the FY 2023 number is projected based on the year’s first nine months.

[4] The City of Geneva, Just the Facts: Lewis Road Property Donation for Affordable Housing, Updated July 10, 2020.