Former New Athens mayor denies conflict of interest on tax issue

News-DemocratDecember 7, 2013 

Former New Athens Mayor Gary Kearns had a conflict of interest in supporting a tax incentive for property he partially owned and sold to a developer for $150,000, according to a village trustee and nonprofit litigation group.

Kearns denies there was any conflict of interest.

Kearns was mayor of the village of 2,000 in 2011 when the Board of Trustees created a tax increment finance district that included three acres of property owned by Kearns and eight other members of the Hidden Lake Estates Development Corp. The incentive, commonly known as a TIF, collects increases in property taxes within the TIF district that are used to reimburse developers for construction costs.

Kearns supported the tax incentive and signed the ordinance creating the TIF district. The mayor only votes to break a tie vote between trustees.

Gary Kearns' brother, Robert Kearns, was also a member of the six-person Village Board and the Hidden Lakes Estates corporation at the time. Robert Kearns abstained from voting on the TIF district and resigned from the board on Oct. 12, 2011-- a week before the land sale to Westmore.

Hidden Lake Estates sold a 1.4-acre parcel for $150,000 to Westmore Equities three weeks before the Village Board approved the TIF district on Oct. 18, 2011, according to county records. The county assessor valued the property at about $1,700 prior to the sale.

Gary Kearns later signed an agreement approved by the board to use TIF funds to reimburse Westmore $300,000 for construction costs related to building a Dollar General on the property.

In an interview, Gary Kearns said the sale of the property had nothing to do with the tax incentive or reimbursement agreement with Westmore.

"That lot was actually sold before that TIF stuff was going on," Kearns said. "It had nothing to do with the TIF. It's not the TIF that sold that property."

"I didn't run for mayor to create a TIF district to sell a piece of property I've been a partner in since 2000," he emphasized. Kearns served one term as mayor from 2009-13. He did not seek re-election.

But a taxpayers' advocate disagreed. He said the mayor may have taken advantage of his position as mayor and may have violated state law, according to Jacob Huebert with the Liberty Justice Center in Chicago. The nonprofit center describes itself as a nonpartisan, public-interest litigation group that's part of the Illinois Policy Institute.

Huebert said Gary Kearns could have violated state law if additional information showed that Kearns or somebody acting on his behalf guaranteed Westmore the creation of the TIF district and reimbursement agreement.

State law prohibits elected officials from having a financial interest in "any contract or the performance of any work" they may have to act or vote on.

A spokesman for the Illinois attorney general's office said the issue would be considered a local matter and would be handled by the state's attorney's office.

St. Clair County State's Attorney Brendan Kelly said he could neither confirm nor deny whether his office is reviewing the issue.

Two months before the land sale, the Village Board approved an "Inducement Resolution" stating the board intended to use TIF funds to "assist" Westmore with the cost of constructing a Dollar General in the village. Gary Kearns signed the resolution.

New Athens Trustee Don Hall was the only trustee to vote against the TIF creation and the $300,000 reimbursement for Westmore. Hall said he believed the TIF's creation was a "total conflict of interest" for Mayor Kearns, and Hall called for the local prosecutor to look into the matter.

"I didn't like how it was done to start with," Hall said. "The TIF agreement made with Westmore was actually done before New Athens ever had a TIF district. The agreement was that if we ever had a TIF district, we would put them in it."

Gary Kearns said the TIF's creation actually had more to do with about nine acres of land across the street from the Dollar General than the store itself.

"That's why the TIF was brought in. We only TIF'd the area because of the highway going around New Athens. New Athens must use every resource we have to get somebody to come to town," Kearns said. "New Athens was in dire need of something just to increase the sales taxes for the village."

Westmore completed the Dollar General store in March 2012. The estimated cost of the project was $1.1 million. Westmore sold the building and property for about $1.145 million on March 19, 2012 to a separate management company.

Westmore still received the $300,000 in reimbursed costs approved by the board a month later, on April 2, 2012, documents show.

The board needlessly approved the Westmore reimbursement because the company had already completed construction of the Dollar General, Hall said. Hall opposed the reimbursement.

"A lawyer came before the board and said we as a board would be stupid to give them TIF money on a building they already started, and we turned around and gave them money anyway," Hall said. "There's an underhanded deal there, I can guarantee it."

Contact reporter Daniel Kelley at dkelley@bnd.com or 618-239-2501.

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