PI Original Angela Caputo Thursday December 3rd, 2009, 10:14am

TIF Dominates The Chicago Budget Debate

Judging by the budget debate that took place yesterday, there's no doubt that members of Chicago's City Council have noticed the unprecedented tax increment financing (TIF) blowback that we chronicled this week.

Judging by the budget debate that took place yesterday, there's no doubt that members of Chicago's City Council have noticed the unprecedented tax increment financing (TIF) blowback that we chronicled this week. In our round-up, we noted how Ald. Tom Allen (38th Ward) had, in late October, trumpeted the need for TIF reform, dubbing it the "over-tax fund." At yesterday's full council meeting, the Northwest Side aldermen turned his criticism of Mayor Daley's favorite economic development fund up a notch. "We're playing a shell game," he said of the city's elusive $1 billion TIF surplus. "It's smoke and mirrors. We're trying to confuse the public but it's not that hard to understand."

What followed was music to our ears. Finally, an aldermen echoed our suggestion that there's room to get "creative" with the vast TIF network. Allen pointed out that, for the third consecutive year, roughly $500 million in TIF money was siphoned off the tax rolls in 2008. He went on to suggest that the city should declare a one-year pause on the TIF program as a way of redirecting some of that revenue back towards the city and other cash-strapped taxing bodies (such as the schools and parks).  Allen also pointed out that -- unlike the asset lease reserves used to balance the latest city budget -- the TIF accounts could easily be replenished. Listen for yourself:

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ALLEN: Why don't you take a one year draw? Why not? [...]

We have a structural problem. Let's compare the TIF and the parking meter reserve funds. Duration. TIFs go on for 23 years. Some of them are maybe mid-term. What about the parking meters?  Gone.  Zero. All right? We can't stretch it out. Replenish the fund? TIFs you can replenish every year. We already heard that. Parking meters -- nothing. Can you borrow against a TIF? Yes. Can you borrow against the parking meter reserve fund? Pretty much no. That's what it is. It's gone. It's not a recurring revenue stream. Can you reverse or change the parking meter deal? Regrettably, no. TIFs you can reverse or change them at any time. [...]

Now the TIF solution can be temporary.  So everybody sitting in this room gets nervous because we've been told that: "Look, if anyone messes with the TIF you're going to lose your park project, you're going to lose your street project." What? Did the city not exist before we had TIFs?

Ald. Bob Fioretti (2nd Ward) also appeared to endorse the idea of a one-year drawdown:

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As Allen correctly notes, releasing the increment for a year would hardly solve all of our budgetary problems. After all, the city would only recoup roughly 23 percent of the money (or around $100 million). But there are ways to get creative. Among his suggestions was to hand over CPS's 50 percent share of the TIF revenue, then let them cover their own bond payments to free up operating cash for the city.

"Until we explore something, it'll never happen," Allen said. "And it's not that complicated. You can declare a surplus. It's in the law. In black and white."

Not surprisingly, there were plenty of mayoral allies who came prepared to defend the TIF system. Among them was Daley's unofficial floor leader, Ald. Pat O'Connor (40th Ward), who said that aldermen who aren't reaping the benefits of TIF simply don't know how to use it. If that means knowing how to cozy up to the mayor to gain access to his slush fund, a standard practice exposed in the Reader's latest TIF investigation, he's probably right.

But Allen wasn't alone in criticizing the way the shadow budget is managed.  Ald. Sharon Dixon (24th Ward), for instance, noted that her blighted Lawndale ward contains five TIF districts. "And guess what?" she said. "You can't tell." Listen to an excerpt from her floor statement:

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That the people living in depressed communities like Dixon's aren't benefiting from the surpluses isn't surprising considering that services for the city's most vulnerable residents continue to drop lower and lower on the mayor's priority list. Case in point: Ald. Joe Moore's (49th Ward) proposal to restore $2.5 million in funding for the city's struggling mental health clinics (they've lost considerable state funding because of an internal billing problem) was shot down by the council in exchange for Daley's fig leaf alternative.

In the end, the council ultimately passed the budget by a 38-12 margin. In addition to Allen, Fioretti, Dixon, and Moore, the other dissenters were Alds. Manny Flores (1st), Pat Dowell (3rd), Sandi Jackson (7th), Ricardo Munoz (22nd), Scott Waguespack (32nd), Brendan Reilly (42nd), Vi Daley (43rd), and Tom Tunney (44th).

Encouragingly, we hear that some of these same aldermen are cooking up a new TIF transparency ordinance. Stay tuned.

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