Watching Fox Chicago Sunday yesterday, we were pleasantly surprised
to see co-hosts Dane Placko and Jack Conaty tease an upcoming segment focused on this question: Why is Willis Group Holdings, Ltd. receiving $3.8 million in
taxpayer dollars to move their headquarters to ...
Watching Fox Chicago Sunday yesterday, we were pleasantly surprised to see co-hosts Dane Placko and Jack Conaty tease an upcoming segment focused on this question: Why is Willis Group Holdings, Ltd. receiving $3.8 million in taxpayer dollars to move their headquarters to the Sears Tower? After all, we highlighted that tax increment financing (TIF) subsidy -- which is being used to renovate the insurance giant's new headquarters -- just last month. Ald. Bob Fioretti (2nd Ward) appeared on the program to discuss the issue. His explanation for why the tax break was necessary? "Companies just don't want to invest." Watch it:
PLACKO: Do you really need a TIF district in order to get people into a modern building like this?
FIORETTI: The TIF district was created a couple years before I became alderman in the area. That one, I do think they need TIF assistance.
FIORETTI: The companies just don't want to invest. And I think we're seeing it. We gave MillerCoors, which is a joint venture between the city and the state, to come here and open up their consolidated of their headquarters.
PLACKO: Boeing got TIF money.
FIORETTI: Boeing got TIF money. And I believe it's unfortunate. But I believe in TIFs because they're economic tools. I'm using it for parks, for schools, my roads, the lighting throughout my ward.
Fioretti's argument that companies are unwilling to invest in downtown commercial real estate falls a bit flat. After all, in addition to the $3.8 million it is receiving from Chicago taxpayers, Willis is spending an additional $13.2 million to refurbish its swank new headquarters in the landmark building that now bears its name. They've clearly got enough cash to deck out their new offices on their own.
So what's going on here? Unfortunately, corporations and their politically-connected executives, such as Willis Vice Chair Bill Bartholomay, appear to view these tax breaks as part of doing business in Chicago. Meanwhile, Mayor Daley controls the purse strings and can curry favor with these CEOs by doling out the subsidies himself.
To understand why this is so ridiculous, it's important to remember that TIF originated as a redevelopment tool for the city's blighted areas -- stretches of land that entrepreneurs and developers would surely avoid without some sore of financial incentive. Under Mayor Daley, the system has been so perverted that it is now using taxpayer dollars to build executive suites in the middle of downtown. The TIF network has also expanded so rapidly that it now siphons hundreds of millions of dollars each from the cash-starved taxing bodies, such as the city, county, park district, and board of education.
To put the future growth of TIF in perspective, the Reader's Ben Joravsky reported back in March that, by 2030, $1.5 billion is projected to accrue in the LaSalle/Central TIF (home to the Sears Tower). Joravsky cited this projection while highlighting the similar $6 million subsidy passed along to MillerCoors, which Fioretti referenced in the interview above.
But the TIF network doesn't need to keep growing at this rate. In fact, aldermen and state lawmakers could take active steps to rein it in and begin diverting some of those dollars back the taxing bodies that need them. Last month, we provided them with a few places to start.