Brett Backus, Woodman’s vice president and director of real estate, concurred that the TIF district is tantamount to not only proceeding with the commercial construction, but forwarding their purchase of the property.

A civil suit challenging a tax-increment financing district, created by the Village of Lakemoor for a 114-acre parcel southwest of the intersection at routes 12 and 120, threatens to derail development of a proposed Woodman’s Foods store, tentatively slated for the site. Village and store officials have stated that without the TIF district supplying funds for infrastructure improvements, the project is effectively dead.

The Wauconda Unit School District 118, the Wauconda Library District, and Wauconda Township are listed as plaintiffs, and the Feb. 2015 filing came the next day, following the Lakemoor Village Board’s approval for its creation, referred to as the “South TIF.”  The three taxing entities and the village are embroiled in acrimony, while the latter attempts to salvage the venture.

A special township meeting was convened March 16, where officials upheld participation in the litigation process by a 3-2 vote. Lakemoor president Todd Wiehofen attended the session, seeking to have the township’s position reconsidered in light of the potential economic dividends to the area.

“This is all maneuvering to line the coffers of the various taxing entities, and they’re killing the project,” said Wiehofen. “They voted 3-2 over dropping the suit because they felt the offer to them was not enough. You’re talking about 1,200 construction jobs, 220 employees at the site, and more at the outlets.

“We offered them 60 times what they would get from the tax apportionment,” he said. This is an opportunity for economic growth and amenities for the area. “Elected officials should do the job they were elected to do.”

A December 2014 proposal from the school district to the village, circulated by Wiehofen, suggested that tax revenues be distributed to all the taxing entities. Attorney Dean Krone, representing the plaintiffs, also attended the meeting and raised objections that the school district was “spearheading” the lawsuit.

In an email, Krone stated, “The proposal asks the Village to commit to distributing a large portion of all TIF revenue to all taxing districts on a pro rata basis, and to distribute 25 percent of all sales tax revenue to all taxing districts on a pro rata basis. It does not require anything of the other taxing districts.

“And while it would require the school district to agree not to sue or otherwise challenge the TIF district, it does not require any other taxing district to make such a commitment or any other commitment.  So it does not bind any other taxing district in any way.”

Wauconda District Library Director Tom Kern, contacted by phone, said, “The library district will continue to be part of the litigation, and our position statement explains the reasons.” In a March 14 “Letter To The Community,” the district reiterates that the school district filed the lawsuit “asking the court to declare that the South TIF district does not meet the statutory requirements for a TIF district, and to order the Village of Lakemoor to dissolve the South TIF District.”

The township and library district joined the suit June 4, on the premise that it “will wrongly divert millions of dollars in property taxes from the districts and other local governments to pay for improvements that are properly the responsibility of the Village of Lakemoor and the developers who build there.  But tax increment financing can only be used when the area is blighted and when there would not be any development without the use of a TIF district.

“… Recently we learned that Woodman’s is interested in acquiring and building on this property. Would they like a TIF district? Probably. Because then the cost to Woodman’s would be far less … The eligibility report commissioned by the Village concludes that this property qualifies for TIF status because it is subject to “chronic flooding.”  But the land … has been farmed continuously for decades.  And on several occasions, the Illinois Appellate Court has recognized that an ongoing farming operation is evidence.”

The purpose of a TIF is to help improve blighted areas within a municipality.

Once a TIF District is established, the base value is determined. As improvements are made to the property within the TIF, the assessed valuation increases. Any increase over the base value is deposited into a TIF account that is used for economic development. The maximum length of the TIF is 23 years.

The hope is that once the TIF expires, the improvements to the property and subsequent increase in property tax revenue will help local taxing bodies, such as schools.

The Janesville-based Woodman’s Foods, Inc. had been in negotiations to purchase 74 acres of the parcel, for their building and parking areas. A 240,000-square foot store, similar to their Pleasant Prairie location, is in the mix. Essential to the project is the site’s water and sewer infrastructure, pegged at $12 million, with the latter coming from the Northern Moraine Treatment Facility in Island Lake.

The TIF district is designed to supply a funding arm for the work, and a talking point revolved around the village and company sharing the cost equally.

“Our $6 million would come from municipal bonds obligations repaid through the TIF district,” said Matt Dabrowski, the village’s Community and Economic Development Director.

“Personally, I am dumbfounded (by the lawsuit),” he said. “They contend that because corn can be grown on the parcel, it is not blighted. You have a property that has produced no growth and been fallow for decades. This is something negatively impacted, and we have a project to jumpstart the area. We offered $1 million as a floor base (to the districts), done incrementally at $100,000 over 10 years. It can’t be done all at once. They’re gambling.”

Brett Backus, Woodman’s vice president and director of real estate, concurred that the TIF district is tantamount to not only proceeding with the commercial construction, but forwarding their purchase of the property.

“This public funding mechanism is necessary to the project, and without that … it doesn’t happen,” he said. “Negotiations for the property purchase are also awaiting the outcome of the lawsuit. It is not a good business practice to complete engineering and due diligence in that type of atmosphere … the short answer is yes, it won’t happen. We’d like to see this resolved sooner rather than later, clarified as weeks, not months, or years.”

Wiehofen intends to request that he be placed on the agenda, for the next school district 118 board of education meeting, in an attempt to resolve the issue.

“This site, and area, was identified by the Federal Emergency Management Agency, and the U.S. Army Corps of Engineers for chronic flooding, and in need of remedial work,” said Wiehofen. “Without the TIF, there will be no Woodman’s. And no deal is possible.”

— TIF lawsuit threatens Lakemoor Woodman’s project —