Progress Illinois

Ask even some proponents of Chicago’s Tax Increment Financing (TIF) system and they’ll admit it has grown unwieldy.

TIF districts now cover half of the city’s acreage, each capturing new property tax revenue in the name of economic development. However, keeping tabs on the millions in off-the-books tax revenue has become virtually impossible, even for folks with an eye for municipal finance.

At a community forum organized by the Independent Voters of Illinois- Independent Precinct Organization (IVI-IPO) last night, some reform-minded Chicagoans—including Cook County Commissioner Mike Quigley—explored possible new game plans for bringing sorely needed oversight to the TIF system.

“How can we retool this program with some governance?” long-time TIF organizer John Paul Jones asked. “I’m not sure it will happen unless the community would take control.”

The challenge has long been finding a solution that people across the city can coalesce around. Some initial thoughts are pushing for a TIF moratorium, mayoral term limits, or stricter state-wide legislative controls.

“We have to have everything on the table,” IVI-IPO’s Aviva Miriam Patt said.

Continue reading »

Yesterday, Mayor Daley and the Chicago Federation of Labor (CFL) reached a deal aimed at reducing the number of layoffs originally proposed by the city.  The Sun-Times lays out the details:

Union leaders have agreed to work-rule changes to reduce the city's overtime costs, the soures said. They have also agreed to drop their opposition to a partial shutdown of city government around the holidays.

In exchange, Daley has agreed to offer cash incentives — at least $5,000 and as high as $15,000 — for members of Laborers Local 1001 to induce retirements by eligible union members.

The City Council is expected to approve Daley's budget when it comes up for a vote tomorrow.  But members of the Independent Caucus, as well as the unions, appeared to take notice when the Tribune reported last Friday that the mayor's 2009 budget projections may be overly optimistic.  Reporters Hal Dardick and Dan Mihalopoulos predicted that "City Hall soon will be scurrying to balance its books yet again" because Daley "is relying on revenue estimates that are rosier than what the city might expect given the dire economic prognosis."

Appearing on FOX last weekend, Ald. Toni Preckwinkle (4th Ward) and CFL President Dennis Gannon both seemed to anticipate dealing with further shortfalls early next year. 

Continue reading »

Open government advocates have long squawked about Mayor Daley's unchecked authority to keep billions worth of property tax revenue off the books and under his control through Tax Increment Financing (TIF).

For years, they've have called on aldermen not to sign off on new TIF districts, which now cover more than a quarter of the city's acreage. They cautioned that the ripple effect of TIF -- which freezes property tax rates for schools, parks and police for 23 years and diverts the money into shadow budgets -- might not be worth a new big-box store or Starbucks in the neighborhood.

They were ignored.

Well, timing is everything. Due to the city's a looming $469 million budget shortfall, more attention is gradually being paid to the huge chunk of property tax revenues -- $555 million in 2007 -- being whisked into TIF accounts.

Continue reading »

In response to the news that Mayor Daley's layoffs would largely affect workers in two departments -- Police and Streets and Sanitation -- Chicago Federation of Labor President Dennis Gannon hit back hard over the weekend. Speaking to the Sun-Times, he offered a litany of ideas for how Daley could make up the $425 million shortfall without laying off any city workers, including raiding the mayor's beloved Tax Increment Financing (TIF) accounts:

Gannon suggested that Daley could wipe out the entire $420 million shortfall without any layoffs. His recipe would call for: raising taxes and fees, possibly including the Laborers Union's proposal for a $10 monthly garbage-collection fee; raiding the $500 million Chicago Skyway fund; sweeping money out of scores of tax-increment-financing districts; reducing consulting fees, and having city employees perform services that have been privatized by the city.

Continue reading »

In the latest issue of Chicago Magazine, reporter David Bernstein compares the legacies of Chicago's current mayor and his father in an article titled "Daley vs. Daley."  Bernstein notes that despite high tax bills, low-performing schools, waste, corruption, and huge debts for public works projects, Daley I, much like his son, often got a pass from the public.  But if there's one person who has been determined not to give the current Daley a pass it's the Reader's Ben Joravsky.  His criticism of the Tax Increment Financing (TIF) system is featured in the article:

Urban affairs reporter Ben Joravsky has argued that Chicago's 160 TIF districts—particularly the nine or so TIFs in and around the Loop area—have become a "secret slush fund" for the mayor and aldermen to subsidize private developers (many of them friends or campaign donors to the politicians) in lucrative projects downtown. By Joravsky's count, TIFs suck away more than $500 million a year in property tax dollars that could be spent instead on parks, schools, libraries, and the city's ailing mass transit system.

Interestingly enough, Crain's reported this afternoon that Daley has decided to retire what Javorsky describes as the "granddaddy" of all TIFs -- the Central Loop district -- by the end of this year, freeing up $111 million in annual tax revenue:

At least in the short run, the action is good news for taxpayers, likely providing a windfall as soon as 2009 for cash-strapped local governments that have been scurrying to cut costs and find new sources of revenue. Public schools would get most of that, but about $20 million a year would be available for the regular city budget.

Continue reading »

While more than $1 billion is routed each year into the state's 970 Tax Increment Financing (TIF) districts, it's often unclear to taxpayers exactly how the cash gets there. In Chicago, The Reader's Ben Javorsky has done the yeoman's work of documenting the lack of accountability that pervades the TIF system. Cook County Commissioner Mike Quigley has also highlighted the problem, most recently in his Progress Illinois column:

The single worst aspect of the TIF system in Cook County is that taxpayers residing in the districts have no idea how much of their tax payments end up in TIF accounts. Indeed, while TIF is listed on every bill alongside the agencies receiving property taxes, the line always reads $0.00. This is due to a quirk in the way the County Clerk has historically calculated tax rates. But as a consequence, the taxpaying public is misinformed.

Now, a new report (pdf) by the Illinois Department of Revenue suggests how the TIF veil could be lifted.

Continue reading »

Earlier this week, we posted a statement from Cook County Commissioner Mike Quigley's office explaining what the average resident can do to combat the spread of Tax Increment Financing (TIF). In the comments section of that post, Yellow Dog Democrat offered some additional tips:

Complain...LOUDLY...to your alderman if you live in Chicago, as well as your state lawmakers. Aldermen allow Mayor Daley to abuse TIF districts right under our noses, and TIF districts are authorized and reauthorized by the state legislature.

If you're a member of your local chamber of commerce, Chicagoland Chamber of Commerce, State Chamber of Commerce, or any other business or professional association, SPEAK OUT. When smart-minded business owners remain silent, policymakers assume that the aforementioned groups speak for them.

Meanwhile, the Reader's Ben Joravsky has a new article out that includes this great synopsis of how TIF works in Chicago:

As we all should know by now, Chicago’s TIFs are supposed to encourage commercial development within certain districts by freezing the property tax yield for up to 24 years. Any new property tax revenues generated in these districts thanks to rising property values go into the TIFs, which are basically bank accounts controlled by the mayor.

To compensate for the taxes they don’t get from the city’s 161 TIF districts, local taxing bodies—the schools, parks, county, etc—raise their tax rates. Don’t be fooled into thinking that TIFs only affect people who live in the districts. They result in citywide tax hikes.

Originally TIFs were intended to eradicate blight in low-income communities that would find it hard to attract investment otherwise. But the rules governing TIFs are so riddled with loopholes—and the oversight of the Community Development Commission and the City Council is so weak—that City Hall has been able to establish TIF districts pretty much anywhere it wants. That’s why such affluent communities as the Loop, the near south side, the near west side, Lincoln Park, and North Center have them. The TIFs have in effect created a second budget for Mayor Daley to control—one that except for extensive coverage in the Reader has been largely ignored by the press or the public. As scams go, it’s a beaut.

Joravsky goes on to highlight a recent court ruling in downstate Belleville that might pave the way for legal challenges to various Chicago TIFS.

Last month, we published a column by Cook County Commissioner Mike Quigley on the spread of Tax Increment Financing (TIF) districts in Chicago. In the piece, titled "The TIF Twilight Zone," Quigley highlighted how this economic development tool has extended beyond its original purpose -- " to spark redevelopment of blighted or near-blighted neighborhoods" -- and now encapsulates "such notable tenements as the Sears Tower, Chicago Board of Trade, and City Hall." Moreover, Quigley cited the utter lack of transparency and accountability regarding the property tax revenue squirreled away by this system and noted an ordinance he proposed to "to change the way property tax bills are calculated so that taxpayers can see how much of their payments are going into TIF accounts."

In response, one Progress Illinois commenter wrote:

You are right, the more I learn about TIF, the more I am outraged. But worse, the more powerless I feel. Where do you suggest we direct our outcry? My alderman, Pat O'Connor, is a big Daley yes-man who runs unopposed. He does not CARE if I am outraged. What to do?

We sent the reader's question along to Quigley's office and got the following TIF tips from policy director Jason Liechty: Continue reading »

By freezing the amount of money a district pays into city services for 23 years, tax increment financing districts (TIFs) were designed to bring economic development to poor, blighted communities that otherwise wouldn’t attract investment. But Chicago's use of the financial tool has proliferated to what some consider unhealthy levels, as the Reader's Ben Joravsky explained in 2006:

There are plenty of reasons to oppose TIFs. They’re poorly regulated and, no matter what City Hall tries to tell us, they’re driving up taxes as a result of the millions they divert. But aldermen tell me they’re forced to go along with TIFs because they’re the only game in town when it comes to funding neighborhood development projects. It’s a go-along-to-get-along system: if you want money for your own ward, you have to vote for TIFs in all the other wards.

Even though TIFs have become the only option for alderman interested in spurring development -- they now cover 30 percent of the land area in Chicago -- the city provides few details about them through maps or the internet. To compensate, the folks at The Windy Citizen did the yeoman's work of collecting what information exists and creating a detailed map of where TIFs are located and how much money has been devoted to each. Check it out here.

(H/T Gaper's Block)