After the excitement of last year's TIF reform discussion, it had been a while since we'd heard aldermen take to the council floor to criticize the system. On Wednesday, they did just that.
Watching a Chicago City Council meeting, it's common to see the aldermen take ample time at the outset to honor police, firemen, teachers, high-achieving students and other local heroes (who deserve the recognition, no doubt). Then when the focus turns to official business, myriad pieces of legislation get passed in the blink of an eye, often with no debate or full explanation of the ramifications. So at Wednesday's meeting, we were interested to see Alds. Pat Dowell (3rd Ward) and Scott Waguespack (32nd Ward) both rise in opposition to one particular measure.
"I think this ordinance places an unfair burden on the taxpayers of the 47th/Halsted TIF [tax increment financing] district," Dowell said on the floor, "who have an expectation that the dollars that they generate within their TIF district are used to benefit that district." Waguespack agreed, adding that the ordinance "creates a slippery slope." Watch it:
After the excitement of last year's TIF reform discussion, it had been a while since we'd heard aldermen take to the council floor to criticize the system. So we took the time to dig into the source of Dowell and Waguespack's objections. Here's what we found:
Hoping to boost capital construction in neighborhoods across Chicago, Mayor Richard Daley announced last month plans to ramp up the "Modern Schools Across Chicago" (MSAC) program. Launched in 2006, this initiative aimed to build or renovate 27 Chicago Public Schools by 2012, 60 percent of which would be funded using money raised in TIF districts. The ordinance referred to above -- which Dowell, Waguespack and eight of their fellow aldermen opposed -- will allow the city to issue $175 million in general obligations bonds next month to continue the construction program.
Dowell's frustration stems from the taxpayer funds being directed at the long-overdue construction of a high school in the Back of the Yards neighborhood on the South Side. According to the city, roughly $19 million was needed in bonds to finish construction on the 200,000 square foot project. Under the ordinance that passed Wednesday, $6.7 million would come from the 47th/Ashland TIF, where the school will be located. Another $12.3 million, however, would be rerouted from the 47th/Halsted TIF, situated just to the east of the construction site.
This maneuver, in which revenue captured in one TIF district is transferred to projects in an adjacent district, is known as "porting." It's not illegal by any means, but it provides ample opportunities for abuse.
Why? The city is now blanketed with TIF districts, many in areas that are not blighted. And many districts are intentionally drawn to share at lease one border with another TIF. As then-Cook County Commissioner Mike Quigley wrote in his TIF reform report (PDF) three years ago, "the borders are being drawn expressly to allow one TIF to take money from another." The ability to shuffle the TIF funds around largely lies with the mayor and, according to a Reader article published last year, his administration regularly uses that power to wield control over the City Council:
At various times at least half a dozen aldermen have told us that mayoral aides pressure them on key votes—such as the ordinances for funding the Olympics or moving the Children's Museum to Grant Park—by either promising to give their wards more TIF dollars or threatening to take TIF dollars away.
Dowell's ward covers about 76 percent of the 47th/Halsted TIF, so it shouldn't be surprising that she is disturbed by the $12.3 million transfer.
In an interview with Progress Illinois yesterday, she told us that, while she agrees that the Back of the Yards school is needed, her constituents won't benefit from it. To add insult to injury, there is a "tremendous need" for capital improvements at three particular schools located within the 47th/Halsted TIF, she said.
In other words, taxpayers in her ward won't have any say in where their TIF dollars flow and they will have a smaller tax base to pay for local projects in need of investment. This was just one problem the Neighborhood Capital Budget Group warned about when the now-defunct watchdog organization analyzed the MASC proposal four years ago.
Because the ordinance in question contained proposals for over two dozen schools, Dowell said it was nearly impossible to employ aldermanic perogative to separate out the Back of the Yards school from the entire package. That loss of local influence is "corrosive," according to the Chicago Journal's editorial page:
So when the money is spent unexpectedly, or sent outside of the district for projects, or community needs go unaddressed, or an alderman’s priorities are pushed to the wayside, bitterness ensues. Tax dollars start to be seen not as part of a citywide, we’re-in-this-together whole, but rather smaller constituent parts — 153 of them, really, the number of districts spread across the city.
Quigley's 2007 report recommended that the amount of money allowed to be ported from one TIF to another be limited to a percentage of the originating TIF’s surplus revenues. He also asked the General Assembly to amend the state TIF statute so that distance -- rather than a contiguous border -- serves as the requirement for moving dollars between districts.
"At some point, we need to really look at this whole TIF issue," Dowell said on the floor Wednesday, "and look at ways that we can reform TIF period." We couldn't agree more.