Former Swansea mayor says village may have misused TIF funds to help pay for fire truck

The Village Board may have improperly spent $170,000 in tax increment finance funds to help pay for a platform ladder fire truck earlier this year, former Mayor Jim Rauckman said.

“I believe that it is not an appropriate use of TIF funds,” Rauckman said of the way the Swansea Village Board used tax increment finance, or TIF, funds for the fire truck. The purchase was “definitely not within the scope of the statute,” said Rauckman, who wants the Village Board to return the $170,000 to the TIF fund.

Mark Rohr, who was named village attorney in May after the fire truck was purchased, said he is reviewing Rauckman’s complaint, which was sent to Swansea in a letter written by Springfield attorney Esther Seitz. Rohr declined further comment.

John Kurowski, who was the village attorney for 28 years before Rohr was appointed, said the village did not ask him or his law firm partner, Jerry Warchol, to give a legal opinion on whether TIF money could be used to buy a fire truck. Kurowski declined further comment on the details of the issue but he said he has spoken to Rohr about it.

Mayor Ken Mueller said Rohr is researching the complaint from Rauckman.

Trustee Matt Lanter said Rohr is expected to give the Village Board a report on his findings during the board’s meeting Monday night.

Former Village Administrator Lisa Powers, who is now village administrator in Bradley, Illinois, near Kankakee, said she could not comment on the complaint.

Under state law, property values in a TIF district are frozen at their current levels for a 23-year period, and any additional revenue generated by a rise in property values is channeled into a special fund earmarked for infrastructure improvements and economic incentives in the district.

A TIF district is intended to help so-called “blighted” property that would not be developed otherwise, or that would not see new growth except for the public investment. For 23 years, the local municipality keeps the difference between the frozen taxes and the new taxes generated by the development. This increment can be used to repay bonds the city takes out. Cities can make one extension to the 23-year life span of a district.

TIFs have been controversial since the law was passed in Illinois in 1987. Often times, other taxing districts, such as school districts, have been opposed to TIF districts because of the potential lost revenue. Also, many have questioned whether some of the areas where TIF districts are created are really blighted at all.

Seitz’s letter states TIF districts are supposed to “provide municipalities with the tools to eradicate blight by developing areas in order to prevent the further deterioration of those areas’ tax bases and to remove threats inherent in blighted conditions.”

Also, she notes the state TIF Act lists types of expenditures eligible for TIF funding. “Critically, vehicles are not included anywhere in the definition,” she said.

TIF funds are supposed to be used to boost economic development in a specific project, Rauckman said. Typically, metro-east cities and villages use TIF funds to pay for streets, sidewalks, utilities and professional services.

The 2002 Smeal/Spartan 100-foot platform ladder fire truck cost $340,000. The Village Board approved a resolution Jan. 29 stating the truck would be paid for with $170,000 from the TIF 1 fund and with $170,000 borrowed from the Bank of Belleville through a five-year loan.

Mueller signed the resolution Feb. 17.

Seitz sent her letter to Mueller and Rohr on Nov. 17 and asked for a reply by Dec. 17. On Dec. 11, Rohr sent Seitz a letter saying he would not meet that deadline.

“I am researching the facts, ordinances and state statutes regarding TIF funds in order to advise the Village Board regarding an appropriate response to your letter,” Rohr said. “I will diligently continue to work on this matter and advise you of the village’s response as soon as is reasonably possible.”

Brad Cole, executive director of the Illinois Municipal League, declined to comment on the topic of whether TIF funds could be used to buy a fire truck and referred questions to the Illinois Tax Increment Association.

Tom Henderson, executive director of the TIF association, could not be reached for comment.

Keith Moran, president of Moran Economic Development in Edwardsville, has previously been a consultant to Swansea but was not under contract earlier this year when the fire truck was purchased. He also declined to comment about Rauckman’s complaint.

Rauckman, who served as mayor from 2009-13, said, “I’m not against TIFS, I’m not against fire trucks.”

He said the village should use property tax revenue collected as part of the increased property tax levy for the platform ladder fire truck instead of using TIF funds.

This story was originally published December 19, 2015 at 8:08 AM with the headline "Former Swansea mayor says village may have misused TIF funds to help pay for fire truck."