PI Original Angela Caputo Wednesday May 13th, 2009, 3:16pm

Does This Tower Look "Blighted" To You?

The "Tale of Two Cities" report (PDF) produced in 2007 by then-Cook County Commissioner Mike Quigley provides a useful refresher course on the TIF system in Illinois:

Tax increment financing (TIF) is a financing mechanism that relies on earmarked ...

The "Tale of Two Cities" report (PDF) produced in 2007 by then-Cook County Commissioner Mike Quigley provides a useful refresher course on the TIF system in Illinois:

Tax increment financing (TIF) is a financing mechanism that relies on earmarked property tax revenue growth within a targeted area – a TIF district – to pay for redevelopment within the area. In Illinois, the state legislation that enables municipalities to use TIF (the “TIF Act”) requires that it be limited to areas suffering from “blight.” After a municipality designates a TIF, local government units are kept from collecting taxes on the area’s property value growth; they may tax only the “frozen” property value as it stood when the TIF was designated. The tax revenue from growth – the tax increment – accrues instead to the TIF, to be spent on capital improvements, developer and rent subsidies, job training, and other expenditures meant to spur new development.

As we've repeatedly noted, Mayor Daley long ago abandoned TIF's specific purpose -- to redevelop "blighted" areas -- and has since created a multitude of new districts in affluent neighborhoods and throughout Chicago’s downtown. Indeed, the TIF system has been so perverted that, yesterday, the city's Community Development Commission (CDC) signed off on a deal to give a multinational insurance company $3.8 million in taxpayer dollars to do something they likely would have done anyway -- renovate their new, swank offices in the Sears Tower.

The company in question is Willis Group Holdings Ltd., who will soon be moving their regional headquarters into three floors of the city's tallest skyscraper (not to mention renaming it the Willis Tower).  At the commission hearing yesterday, city officials, including Ald. Bob Fioretti (2nd Ward), talked up the $3.8 million giveaway as an investment that will bring 125 white-collar workers to the Loop from their current offices in Oak Brook, Lombard, and Schaumburg.  And the new location admittedly makes a lot of sense: 354 employees (a majority of the company's local staff) already work in offices scattered around downtown Chicago.

Yet city officials repeatedly implied that, without the subsidy, the insurance company might have moved its headquarters to the suburbs.  Willis vice chair Bill Bartholomay strongly suggested at the hearing that the company would have moved into the skyscraper regardless, saying, "There was only one option: to stay in the city." (Bartholomay, incidentally, formerly served as a Chicago Park District board member and the president of John Daley's clout-heavy but now-defunct Near North Insurance Brokerage.)

Considering the estimated price tag of the planned renovation -- $17 million -- it seems a bit far-fetched to think that the company couldn't have spruced up some executive suites without that extra $3.8 million from Chicago taxpayers.

There are, however, some strings attached. Over the life of the 10-year agreement, the company has to keep 479 people on the payroll and "commit" to adding 100 new jobs. (Hopefully, the TIF transparency ordinance passed earlier this year will allow watchdogs to make sure these types of commitments are fulfilled.) Willis has also pledged to contribute $200,000 toward a mayoral workforce development program, but even Fioretti agrees that this represents a token gesture. 

To put the Willis deal in perspective, it's instructive to look at another redevelopment agreement approved by the CDC yesterday.  This one would invest $4 million to bring a grocery store and shopping center to a food desert at 115th Street and Michigan Avenue in the Roseland neighborhood on the city's South Side.  The difference?  This deal took 10 years to finally get off the ground. 

Now the Willis agreement moves on to the City Council, which is all but certain to sign off on the deal.

One bright spot from yesterday's proceedings: In my conversation with Fioretti, he suggested that the city should be paying more attention to the surplus TIF funds currently sitting around in Daley's virtual slush-fund. "We have $1.2 to $1.5 billion available in TIF," he said. "Let's start using that to improve our roads, our streets, our lighting to keep our people moving."  In order to make that happen, a lot more aldermen are going to have to speak up.

Image used under a Creative Commons license by Flickr user Robert R Gigliotti, HQPrints.net.

Taxonomy upgrade extras: 


Log in or register to post comments

Recent content