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Tax Increment Financing
Quick Hit
by Micah Maidenberg
Fri Jan 7, 2011

TIFs, Economic Development, And Job Losses

When Daley administration officials promote their decision to grant tax increment financing (TIF) dollars to large, profitable companies based in the city's Loop, there's usually a line about the jobs that the TIF grant will help "retain" downtown.

Thing is, the mayor's TIF-centric economic strategy hasn't proven all that effective on the jobs front, especially for a pretty important constituency: residents of the city of Chicago. That's according to "Loopholes," a new investigation by the Chicago Reporter's Angela Caputo (a Progress Illinois alumna). Her analysis finds that the city's Loop shed nearly 13,000 jobs "during the better part of the past decade." And 94 percent of those cuts were borne by city dwellers, with the vast majority of the job losses hitting South and Southwest Siders. Meanwhile, downtown's two biggest TIF districts (in the Loop proper and on the Near South Side) siphoned off $1.2 billion in property tax dollars in the name of economic development from other taxing bodies that are now facing their own budget crises.

"The whole point of TIF is to spur development in blighted neighborhoods. But the Reporter has found that many of the areas needing economic development money the most aren’t getting much; their sales tax revenue is shrinking, and the number of Loop jobs they hold are dwindling," Caputo writes. "At the same time, elected officials have failed to force businesses to set local hiring or wage standards, though many of these businesses are benefitting from millions of local tax incentives to move to the Loop."

The problems with how the Daley administration used tax increment financing are legion, and the Reporter's new piece adds yet another chapter to the story.

Quick Hit
by Micah Maidenberg
Fri Dec 17, 2010

CPS, The TIF Program, And The Mayoral Candidates

There wasn't much discussion of Chicago's tax increment financing (TIF) system during the city's last mayoral election. Clerk of the Circuit Court Dorothy Brown, Mayor Richard Daley's primary challenger four years ago, critictized Daley's TIF policy once, in early February 2007, according a review of Sun-Times and Tribune TIF-related stories between autumn 2006 and the following February. To be sure, there were other pieces about TIF districts in both of the city's major dailies during that time period, many of them concerning tax increment financing in the suburbs. But the issue didn't gain traction in the municipal campaign.

How the times have changed.

At last night's Chicago Teachers Union mayoral forum, the candidates were asked to account for the TIF program's impact on Chicago Public Schools. As the largest recipient of property taxes in Chicago, CPS has the most to lose when the city's TIF districts siphon off money from the local property tax base. At the CTU event, everyone endorsed more transparency over the TIF program. Chico said he fought to get TIF dollars for CPS while he headed the Board of Education. Moseley Braun decried diverting money from schools. Miguel del Valle and James Meeks were the strongest in saying TIF districts should not be opened in non-blighted neighborhoods.

Watch four of the mayoral contenders take their best-one minute shot on TIF reform and schools:

It's heartening that the city's political climate is such that the mayoral candidates must now account for the massive TIF program Daley has grown during this more than 21-year tenure. You can largely thank a few progressive aldermen and two of the city's best reporters for that.

Quick Hit
by Micah Maidenberg
Fri Dec 10, 2010


We noted the following contrast, saved here in a screengrab, on City Clerk Miguel del Valle's website this morning:

For more about the delay of the Sweet Home Chicago ordinance, check out our post from Wednesday. The agreement with the Merc will provide the trading exchange with up to $15 million in tax increment financing subsidies.

Quick Hit
by Micah Maidenberg
Tue Dec 7, 2010

More Ideas, Pitches, Plans From The Mayoral Candidates

Chicago's mayoral contenders are releasing platforms and talking up their ideas for the city at a fairly regular pace at this point. (Though, to be sure, the would-be mayors' plans for the biggest-ticket items -- the city's budget and job creation come to mind -- are still largely under wraps.) We recently took a look at ethics pitches from some of the contenders and noted Rahm Emanuel's energy efficiency proposal. Three other mayoral platform-related news items are below:

City Clerk Miguel del Valle got into the education mix last week, promising to increase the number of "community learning centers" around the city by 50 percent during his first term as mayor. In announcing the plan, del Valle lauded the work of Communities in Schools Chicago, a group that connects schools with non-profits to provide academic support and programming focused on arts enrichment, health, and other topics; the group says it reached 63,000 students during the 2009-2010 school year.

In a recent speech on the Southwest Side, Gery Chico said he'd ensure all of Chicago's industrial corridors have high-speed internet access and actively recruit so-called green companies to the city. A Chico administration would also "strategically utilize the city's tax increment financing dollars to support large and small businesses," according to a press statement. That's likely music to the business community's ears. Outgoing Mayor Richard Daley's TIF grants to large, profitable Loop companies have come to symbolize the TIF program's excesses. Chico says his full jobs plan is coming soon.

State Sen. James Meeks, meanwhile says he'd create a "mobile City Hall" to allow residents to conduct city business in a different neighborhood each week. Meeks, by the way, is on board with the Sweet Home Chicago ordinance, and he discussed it -- and criticized Emanuel -- in Englewood yesterday*.

UPDATE: Sen. Meeks' event in Englewood occured on December 7.

Quick Hit
by Adam Doster
Fri Dec 3, 2010

A Cubs TIF?

It's been a rough week for the Chicago Cubs. Last night, legendary third basemen and broadcaster Ron Santo passed away at 70 due to complications from bladder cancer. The team missed out on free agent Adam Dunn, a left-handed slugger who decided to bring his talents (.902 career OPS) to the South Side instead. And down in Springfield, a plan proposed by the team's ownership to fix up Wrigley Field using public dollars was met with stony silence from state legislators.

The initial deal devised by the Ricketts family was problematic, to say the least. The family essentially asked to use 35 years worth of growth in amusement tax revenue (that would otherwise flow into the coffers of the city and county budget offices) to finance a $200 to $300 million face lift for Wrigley Field. The optics were terrible; with local budgets bleeding badly, rich, anti-government conservatives asked for a handout just so they could save about $37 million in interest costs. Plus, the math underlying the legislation was questionable, at best.

Folks in the capitol say the plan could come back up for a vote when lawmakers reconvene in early January. At City Hall, officials are also considering several other alternatives to help out the Lovable Losers. One would involve extending the boundaries in which "downtown" restaurants charge a 1 percent tax on meals. (The current district stops eight blocks south of Wrigley.) Other sources tell the two daily papers that there's also talk of creating a new tax increment financing (TIF) district around the ballpark. Here's a map of Lakeview, layered with the city's existing TIF districts:

The neighborhood is practically devoid of any TIFs, which is relatively rare. Can one plausibly argue, though, that Wrigleyville is in danger of falling into blight without a handout? The odds of the Cubs winning the World Series next year are better.

PI Original
by Micah Maidenberg
Tue Nov 23, 2010

Orr: No More "Secretive Slush Fund"

The city of Chicago's TIF districts collected $520 million in 2009, the second highest annual haul on record, according to Cook County Clerk David Orr. Now Orr is calling for a minimum six-month moratorium on new TIF districts, saying they remain opaque.

Quick Hit
by Micah Maidenberg
Thu Nov 18, 2010

TIF Projects, Contingency, And Mayoral Power

In recent weeks, we've been tracking how outgoing Chicago Mayor Richard Daley's now-ratified decision to declare $180 million of the city's tax increment financing dollars as surplus is affecting other local public agencies that depend on property tax dollars. Each will receive a windfall relative to their share of the county property tax allocation, available here. Chicago Public Schools will get about $90 million back, the city will use $38.5 million in surplus TIF dollars to help fund its operations in 2011, and the Chicago Park District will suddenly have an additional $12 million.

Of course, the park district gets other TIF grants, and defenders of the TIF program would surely point to this money as a reason why the program works in its current form. The park district's budget summary for 2011 (PDF) says its board was "successful in capturing" more than $40 million in TIF funds in 2009 and "sucessfully lobbied the City Council" for $65 million in TIF funding for capital projects during 2010.

But what's notable about the quoted phrases above is the contigency they express. Parks staff must capture and lobby TIF dollars; that effort may be succesful or not. One thing is for certain: when taxing bodies like the park district are forced to engage in this kind of give and take with the mayor's office and city council, power flows to them, and mostly to the mayor's office. Taxing bodies like CPS and the park district need to decide whether they would be better off controlling more of the annual property tax collection directly.

Quick Hit
by Micah Maidenberg
Fri Nov 12, 2010

School Districts Versus Cities On TIF Policy

How will Chicago Public Schools close the daunting $700 million budget shortfall projected for next school year?

Resolution of the budget crisis in Springfield certainly would help; state government owes CPS a total of $370 million for the last and current school year. Another source of dollars administrators could seek to tap: the city's tax increment financing (TIF) districts. Recall that CPS will gain around $90 million out of the $180 million in TIF funds that lame duck Chicago Mayor Richard Daley is proposing to use as surplus in his FY 2011 budget. CPS is getting a fraction of what it could, however. Even after this year's surplus declaration, an estimated $520 million in TIF reserves will remain untouched.

It would be rational for top leaders at CPS and members of the Board of Education to pound the table and demand property taxes stashed away in TIF accounts. The Board of Education has the most to lose by the proliferation of TIF districts in Chicago, which freeze the amount of property taxes the board can cull from those districts. Elsewhere, school districts often serve as a check on municipal governments' appetite for tax increment financing. Not so in Chicago. UIC professor Rachel Weber talked about this dynamic at a TIF panel discussion earlier this fall. Here's a clip:

A variation of this fight is happening out in Oak Park. The situation has its own specific history and legal background but it does provide a recent example of a school district pushing back against a municipality's TIF policy. Leaders of Oak Park-River Forest High School sued the Village of Oak Park earlier this year for allegedly violating an earlier deal that allowed the village's downtown TIF to be extended an additional 12 years. In exchange, the Wednesday Journal reported this spring, "village hall was to 'carve out' properties in Oak Park's downtown tax increment financing district ... and funnel money back to other taxing bodies. But that hasn't been done, the high school alleges." Maybe it's time for the Board of Education and CPS to have a chat with their counterparts out in Oak Park ...