Twenty-five years ago, the village of Machesney Park, Illinois, did not exist.  Today, it is one of the fastest-growing municipalities in the state: This spring, the village will pay $143,000 for a special census to determine how far the population has risen above its 2000 Census level of 20,759.  Village officials estimate that 1,400 people have moved to the community; according to the Rockford Register Star, that would mean that Machesney Park would receive an additional $154,000 in “state income, motor-fuel and use taxes.”  The revenue is eagerly awaited by village officials, who proudly proclaim on the village’s website ( that they have “never levied a local property tax.”

Compared with Rockford, its much-larger neighbor to the south whose municipal property-tax rate is $2.23 per $100 of assessed value, Machesney Park seems like a libertarian paradise.  Municipal services and infrastructure improvements are funded by fees and by a one-percent sales-tax levy (as well as state tax distributions and the occasional state grant, especially for roads).  This “pay as you go” form of government, of course, still does not satisfy the strictest of libertarians, but those who live within reality understand that local government is here to stay.

And from the standpoint of the modern American capitalist, what’s not to love?  Machesney Park has developed a reputation for being pro-business—and rightly so.  As each additional family moves to the village, the cost of municipal services rises more than the corresponding increase in sales-tax revenue, so, in order to keep services at the same level, Machesney Park officials have aggressively pursued retail growth.  By providing village residents with everything they could possibly want to purchase and attracting “consumers” from outside the village (the village sees its retail base as a “five-county area”), Machesney Park can keep the sales-tax coffers full to overflowing.

Developers love the village, especially the Gateway District—the area between Gateway Plaza, an almost 400,000-square-foot retail “regional center” at the corner of Illinois 251 and 173, and the I-90 tollway, a few miles east along 173.  An area southeast of the intersection of 251 and 173 was designated a tax-increment financing (TIF) district in 1991 by declaring it blighted, and this has allowed village officials to capture revenues from property taxes without levying one themselves.  As the Register Star explains, “In a TIF district, property taxes are frozen for all taxing bodies except, in this case, the village.  As development occurs within the district, the village collects the increased taxes and spends the money on redevelopment projects.”

Prominent local developers, such as Sunil Puri of First Rockford Group (responsible for much of the development along Perryville Road, on Rockford’s far east side), have been the beneficiaries of TIF funds, either directly (Puri, in a controversial move by the village, received a $300,000 grant from the TIF fund in 2002 to purchase property along 173) or indirectly, as the village has purchased smaller parcels with the funds, consolidated them, and sold the larger parcels to developers and big-box chains.

“Consumers” (and I use the word strictly, not, as is all too common today, as a synonym for people or even citizens) seem to love the village, too.  As the Machesney Park website proudly proclaims,

The fastest growing corridor in Northern Illinois is located right in the heart of our village.  Dubbed the Gateway District, the corridor at the crossroads of IL 173 and IL 251 has grown from cornfields to big boxes and restaurants within the past three years.  Menard’s [sic], Kohl’s [sic], Target, and Home Depot are located here, as well as specialty stores like EB Games and Goin’ Postal.  National and local restaurants include Chili’s, Panera Bread, Quizno’s [sic], Qdoba, Papa Murphy’s, Steak n’ Shake, Jimmy John’s, Happy Wok, KFC, and Long John Silvers.  A state-of-the-art 14-Plex Kerasotes Theater [opened] in April 2005.

One thousand new houses have been built or planned in the past few years (approximately a 15-percent increase in housing since 2000), and the opportunities for consumption have been at least as important as the relatively low tax burden (for the Rockford area) in attracting families to fill them.  Of course, each additional house increases the total cost of municipal services, which means that the village needs more sales-tax revenue, which makes retail growth all the more urgent, which attracts more consumers to the village . . .

And, for that reason, anyone considering moving to Machesney Park might want to take a look at how longtime residents of the area are faring.  For some property owners, Machesney Park today seems a little closer to Hell than to Paradise.  Twenty-five years ago, before the village was incorporated and when the Gateway District was still cornfields and country roads, Andrew Harty had already lived for 30 years on Orlando Street, in the area southeast of the intersection of 251 and 173—right on the western edge of the current TIF district.  In fact, he and his neighbors had built Orlando Street when Winnebago County refused to do so.  Here, in a small, four-bedroom, story-and-a-half home—the first and only one he had ever owned—on a double lot, he brought up 15 children (eight by his first wife; seven by Janet, his second), most of whom still live in the area.  Here, he has raised horses (when the land was still zoned agricultural, though it was surrounded by residential and commercial) and enjoyed the sounds of his 25 grandchildren (and now, one great-grandchild) playing.  When Andy, a former steel fabricator at JI Case in Rockford, retired, the Hartys did not sell the house—their mortgage was paid off long ago—and head south to escape the harsh Midwestern winters or go back to South Dakota, where Andy is originally from.  This home, on this quiet, wooded street, has been the center of his universe his entire adult life, and he had no intention of going anywhere.

That all changed in the fall of 2004, when the village of Machesney Park targeted the Hartys’ property in its ongoing effort to “develop” the southeastern corner of 251 and 173—in other words, to turn a residential neighborhood that provides little or no revenue to the village into a retail district that would bring in significant sales-tax revenue.  When the Hartys refused to sell their family home, the village raised the specter of eminent domain.

The whole process happened almost too quickly to fight.  With Machesney Park and private developers snatching up the land all around them, a sense of inevitability set in.  That, says Janet Harty, is the most important lesson she can offer for those in similar situations.  “If there’s a group of people together in one area like that, they should all get together and work together with an eminent-domain lawyer, instead of everybody getting their own and trying to fight it themselves.”  For her daughter Angie, it all comes back to community.  Individuals are powerless to stop a government on a self-appointed mission, but a strong community might have been able to prevent what happened to the Hartys.

Andy Harty now owns his second house.  Machesney Park’s final offer for his home and land was $75,000; in order to buy a comparable house, he had to take out a mortgage for $28,000—at the age of 76.  His annual property taxes have risen from under $400 to $2,200, a massive jump for a couple who live from check to check.

While a better settlement could have alleviated the Hartys’ newfound financial insecurity, it would never put right the worst of Machesney Park’s wrongs.  “How can you put a value on a family’s home, when they’ve raised their kids there?” Janet asks.  “How can you put a value on the money that people put in their home to make it a home for a lifetime?  How can you buy the feelings of my daughter living there all her life, and then driving by there some day, and there’s no home there anymore?”  Andy’s 55th and final Christmas in his home this past December, surrounded by his family, will be the source of priceless but bittersweet memories for years to come.

The Hartys, I should note, were threatened with the use of eminent domain before the U.S. Supreme Court handed down its decision in Kelo v. City of New London.  Anyone who thinks that Suzette Kelo’s situation was unusual is fooling himself.  The only thing that made her case any different from thousands of others across the country was that she decided to spend the time, effort, and—most importantly—money to fight it all the way to the Supreme Court.  Her loss simply confirmed the status quo—not the status quo under the law, of course, but the political one.

Here, Machesney Park offers a wealth of examples.  Barry Paye was threatened with the use of eminent domain when he rejected the village’s initial offer for two lots he owned along North Alpine Road, on the eastern border of the TIF district.  As he told the Register Star in December, after settling for a higher offer from the village and avoiding the seizure of his land, “Basically, the village strong-armed me . . . I settled because I didn’t want to go to court and spend more money dealing with them.  But if the village wasn’t buying all this property, I could have gotten a much better price for my land from a private developer.”

Ed and Nora St. Germain, residents of the same area southeast of the intersection of 251 and 173, didn’t want to sell to the village, so Machesney Park invoked eminent domain around the time of the Kelo decision.  Their mobile home, extensively remodeled by Ed over the years, will make way for an unnamed retail development—most likely a big-box store.  As Nora told Pat Milhizer of the Register Star in July 2005, “It stinks.  I don’t think it’s fair, but there ain’t nothing you can do . . . There is no freedom.  This is Grandma’s house, and it ain’t going to be Grandma’s house no more.”  Ultimately, the St. Germains came to an agreement with the village and sold the property.

As Steven Greenhut points out elsewhere in this issue, eminent domain is disproportionately used against those with lower incomes and fewer resources, who are consequently less likely to fight extended court battles.  In many cases, their home and the land on which it sits is their greatest asset, so the only way they could fight would be to mortgage the very property they are trying to protect.  Over the past five years, Machesney Park has primarily targeted such people, but, in one sense, that hardly makes a difference.  In municipalities that levy a property tax, there is always something that can be done with any piece of property to increase its value and, therefore, its property taxes—and someone other than the current property owner is more likely to do it.  In municipalities without property-tax levies, such as Machesney Park, the case is even simpler: No matter what the value of a residential property, the village can maximize its revenue by replacing a home, which produces sales tax only incidentally, with a business.

Machesney Park’s director of finance and administration, Bob Mullins, does not mince his words in describing the village’s strategy.  In December, he explained to Isaac Guerrero of the Register Star that, “Ideally, the village would like to see one or two big-box stores locate [on Barry Paye’s land], which would maximize sales tax revenues . . . ”

Under such a “pro-business” regime, even smaller businesses are not safe.  As Mullins bluntly told the Register Star,

We need to have some control over how the land develops . . . That’s why we’re buying all the property ourselves.  Otherwise, you might see a dry cleaner pop-up [sic] on one lot, a video store on another and a bunch of small strip malls.  It wouldn’t look good, and it wouldn’t make the most of the sales tax potential.

This bias in favor of larger businesses and maximized sales-tax revenue is evident not only in Machesney Park’s attitude toward new development but in its dealings with existing businesses in the village.  Art Hinkel owns a self-storage business where Melbourne Avenue, which runs parallel to 173 in the midst of the TIF district, ends in a frontage road along 251.  The village wants to make an intersection at 251 and Melbourne to take some of the load off of the booming intersection of 251 and 173, as well as to provide easier access to future businesses in the area.  To ease the rerouting of the road, the village wants a corner of Hinkel’s commercial property, and the village trustees have voted to invoke eminent domain if Hinkel will not sell.

At first glance, this seems like a traditional use of eminent domain, but there is more here than meets the eye.  The future businesses that the intersection will serve are already being planned by Sunil Puri and his First Rockford Group, which “has bought more than a dozen privately owned homes south of Hinkel’s property,” according to the Register Star.  So the extension of Melbourne at the expense of Mr. Hinkel’s property rights will benefit a politically connected developer whose previous projects have brought the village significant sales-tax revenue.  It’s not exactly Kelo, but it’s a little too close for comfort, especially since Puri, in the June 29-July 5, 2005, issue of the weekly Rock River Times, claimed to have doubts about the expansion of eminent domain under Kelo: “I believe certainly it should be used for public transportation, and projects for the public good.  But purely for a developer to take over a tract of land?  I don’t even know how a developer can morally justify that.”

If Puri does have reservations about the actual use of eminent domain to transfer property from one private owner to another, he seems to have fewer concerns about government using the threat of eminent domain to benefit his company.  The same article in the Rock River Times details the story of Don Henninger, who, in 2003, sold the land on which his excavating business stood after a resolution authorizing the use of eminent domain against his property was introduced at a meeting of the Machesney Park board of trustees.  Puri used Henninger’s property, along with others he acquired, to build a strip mall.

Machesney Park village president Linda Vaughn boasted to the Rock River Times that, as a matter of course, the village offers property owners 20 percent over appraised value.  That may explain why most of the threatened cases of eminent domain in the village are resolved without the power actually being invoked, but I doubt it.  If all of those property owners were satisfied with a village-approved appraisal plus 20 percent, Machesney Park would never have had to threaten eminent-domain proceedings in the first place.  It is far more likely that the threat itself was the deciding factor, as the displaced property owners have repeatedly claimed.

Even today, after all he has been through, Andy Harty still considers the house on Orlando Street his home.  He told me of the plans he had made to expand his living room and redo his kitchen.  “We made plans on that house all the time . . . If Machesney said, ‘Hey, you can have your house back,’ I’d go right back there and live in it . . . I’d sell [the new house] for the $28,000 we’ve got to pay off on that one . . . I’ll take mine back.”  His daughter Angie is not so sure.  “I’d get out of Machesney Park”—and, in fact, she’s thinking of selling her own home on Rockford’s northwest side, which is being encroached upon by development around the latest Wal-Mart.

“Land prices are only going to continue to climb along 173.  You can’t avoid that,” Machesney Park finance director Bob Mullins told the Register Star.  That may be true today, but it wasn’t 25 years ago, or even 5.  The single-minded pursuit of tax revenue by Machesney Park and the unbridled avarice of modern developers and consumers have made it a reality.

The next time someone tells you that “development” is “inevitable” and that all “economic growth” is “progress,” tell him to go talk to Andy and Janet Harty.  He can find them in Loves Park, the next town to the south, out of the reach of a village that has grown too greedy to serve its own citizens.