PI Original Micah Maidenberg Tuesday November 23rd, 2010, 5:16pm

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.

Cook County Clerk David Orr called for a minimum six-month moratorium on new tax increment financing (TIF) districts in the city of Chicago today, saying city taxpayers must be certain their property taxes aren't flowing into a "secretive slush fund."

Even as the city and other public taxing bodies in Cook County have struggled with budget deficits, Chicago's 158 TIF districts continue to grow richer, collecting nearly $520 million in revenues last year, a figure up 5 percent versus 2008, data from Orr's office shows. It's the second highest TIF haul on record since 1986. (All told, Chicago's TIF districts have collected more than $4 billion in increment revenue over the last 23 years). The two biggest TIF districts in Chicago last year were the Near South TIF, which collected $63 million, and the LaSalle Central district, which saw revenues of $21 million.

Here's a clip of Orr talking about about some of the shortcomings of the city's TIF program:

A moratorium would allow for a thorough examination of Chicago's use of tax increment financing as a new mayoral administration takes over City Hall, Orr told reporters today. It would also provide a chance for further transparency measures to be put in place. He wants future TIF districts to articulate clear and specific project goals, for example.

The open-ended nature of the city's TIF program is one of the main problems with it presently, Orr said. Districts are created with vague goals and left to linger, stacking up tax dollars that City Hall, Chicago Public Schools, the park district, and other taxing bodies could have used for their annual operations.

"Too often Chicago's policy has been to collect millions in a piggy bank and decide how to spend it later," he said. "More money has accumulated than anyone could have ever imagined ... Some of those funds could have been used by other taxing bodies for years if those TIFs had been retired, when they had gone their course."

On paper, tax increment financing is meant to spur economic development in blighted communities that otherwise wouldn't be able to attract private investments. TIF districts freeze the amount of property taxes public agencies collect for generally a 23-year period, reserving all new tax revenues for development projects within the district.

During lame duck Mayor Richard Daley's tenure, TIF districts proliferated across the city -- including downtown areas -- and provided multi-million dollar grants to multinational Loop-based corporations.

Orr expressed support today for a piece of legislation -- SB 3151 -- that would allow other taxing bodies' property tax haul from the parcels inside a TIF district to expand each year with inflation. Currently, that revenue stream is frozen for 23 years when a district gets created. Here he is discussing the bill:

Changes to the TIF program have been discussed on the mayoral campaign trail this fall and winter. Candidate Rahm Emanuel wants to use $25 million from the districts to hire new police officers, an idea that may not be legal under the state TIF statute. Emanuel has said TIF dollars should be subject to the City Council's regular budgeting process (a position Orr endorsed today) and supports greater transparency over them, as well.

At a press conference today, Gery Chico told Progress Illinois he'd soon be unveiling new proposals to use TIF districts to create jobs. Other candidates have yet to spell out comprehensive TIF policies.

Even as Daley leaves office declaring $180 million in the city TIF accounts as "surplus," none of the candidates have called for closing down any specific TIF district. Some of the districts in the greater downtown area still have a long shelf life -- the LaSalle Central TIF district is scheduled to remain open for at least another 19 years, diverting precious resources away from increasingly-strapped city agencies.


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