Residents of Chicago's 23rd Ward raised concerns about the city's tax increment financing (TIF) program after learning Wednesday evening that millions in economic development funds have yet to be spent in their community.
At the CivicLab's TIF town hall meeting at John F. Kennedy High School, Southwest Side community members learned that the six TIF districts located in the 23rd Ward had about $16.6 million sitting in their collective bank accounts at the end of 2013. Last year alone, the ward's TIF districts collected nearly $2.3 million in property tax revenue, according to the CivicLab's analysis.
Business owner and Southwest Side resident Martin Arteaga, who is running for alderman in the 23rd Ward, attended the meeting.
"There needs to be a lot more clarity and transparency as to where this TIF money is going," he told Progress Illinois. "Here in the 23rd Ward, particularly in the Midway Airport area along Cicero Avenue, you have a bunch of empty lots. We could use some of that money to redevelop that area and actually be able to expand our tax base, because we have thousands of people who pass through going to Midway Airport.
"We need to be able to spend more of that TIF money in the ward," added Arteaga, who plans to make the TIF program a key campaign issue. "We don't have a Boys and Girls Club on the Southwest Side. We'd love to have some of that money go to projects like that."
TIF money comes from a portion of property tax revenue within a TIF district that gets diverted from local units of government, including the public school and park districts, and used as a subsidy for community development projects in the defined area. The city has 151 TIF districts, which typically have a 23-year life cycle.
Chicago’s TIF program was originally intended to spur economic development and create jobs in "blighted" neighborhoods. TIF critics, however, say the term blighted has been used too loosely, as TIF districts have been created in both the Loop and downtown areas. The program is also controversial because the city has doled out millions of dollars for projects downtown, while some truly blighted areas have seen few benefits. The program's skeptics have also called into question the city’s practice of handing large TIF subsidies to big corporations.
Most of the recent TIF projects in the 23rd Ward, which includes the Archer Heights, Garfield Ridge, Clearing and West Elsdon neighborhoods, have been for public-sector improvements, the CivicLab found.
The biggest commercial TIF development in recent years was a Shop and Save Market at 5829 S. Archer Ave., which was completed in 2010. The project's developers, Archer Advisors LLC and 5829 Archer Development LLC, were awarded a $3 million TIF subsidy to help cover building renovation costs for the new grocery store. The property previously housed a Dominick's, which closed in 2007. The $3 million in TIF funds came from the Archer/Central TIF District.
"Some people would say, 'Look, we need a market. We didn't have a market in the community, so we had to ... give the developer of this mall $3 million. We had to give Shop and Save $3 million to do business here,'" Tom Tresser, co-founder of the CivicLab and leader of its TIF Illumination Project, told the crowd.
"Whatever claim Shop and Save made to get the $3 million, you weren't part of that conversation," he added. "In some places, neighbors go, 'OK, we need a grocery store. I'm OK with my money going for that.' So it's up to you to decide these things. But when we do these [TIF Illumination] presentations, and this is now the 25th one I've done, at no time did anyone know these facts" about TIF projects in their wards.
Archer Heights resident Carol Zwiazek said she has made some trips to the Shop and Save, but prefers to shop elsewhere because she says the prices are too high.
The $3 million TIF subsidy "is not worth it," she said after Wednesday's meeting. "It's not really a place to save."
One meeting attendee pointed out that the recently-built grocery store might be impacted by construction proposed for the area.
The Illinois Department of Transportation is currently gathering public feedback and examining options for construction along Central Avenue and Archer Avenue to reduce roadway congestion in Chicago's Garfield Ridge community as part of the "Central Avenue at BRC Railroad Grade Separation Study." The Shop and Save is located within the study area, and, depending on what proposal is approved, the store could be lost due to the construction.
Residents wanted to know whether taxpayers have any money-back guarantees when a TIF project later goes bust for whatever reason. In response, Tresser explained that TIF subsidies are typically a "straight-up gift."
Shop and Save "can close tomorrow. They can move. Whoever owns that [property] can sell to, say, Jewel or something and get a profit," he said. "You don't get that profit. If they had a terrible fire or someone embezzled the money and the business went bankrupt, we don't get the money back."
"Generally speaking, (TIF) money is a one-way street," he continued. "Once it's gone, it's gone."
The CivicLab, meanwhile, analyzed Illinois State Board of Elections records and found that local Ald. Michael Zalewski (23rd) received a $10,000 campaign donation from Shop and Save in February of 2011. Shop and Save also donated $3,000 between June of 2009 and March of 2010 to the 23rd Ward Regular Democratic Organization, chaired by Zalewski.
"The contributions speak for themselves," Arteaga said. "I'm not saying there was a quid pro quo, but Shop and Save did receive $3 million and Zalewski did receive $13,000 from Shop and Save."
Requests for comment left with Zalewski's office were not returned by deadline.
Overall, the CivicLab found that the city of Chicago had more than $1.7 billion in unspent TIF funds at the end of 2013.
"If we have almost $2 billion in property taxes, which is your money, sitting in accounts somewhere, we can't really be broke," Tresser said.
"This, to me, is one of the biggest political economic policy questions on the table right now," he added. "Are we broke, or are we not broke? Do we close 50 more schools and send kids into new gang territory? Do we close more mental health clinics? Do we shut another bus line?"
In its 2014 annual financial analysis, the city acknowledged that Chicago's TIF districts "had an aggregate balance of $1.72 billion at the close of 2013." However, the city said most of that money, $1.67 billion, is "reserved for payments due in connection with committed projects, including a portion that is reserved to fund project costs in TIF districts where revenues are declining, in the event that annual revenues are insufficient to pay future obligations."
Tresser said the CivicLab does not believe the city's claim that most of the unspent TIF money has already been assigned to economic development projects or is otherwise encumbered. The CivicLab plans to file a Freedom of Information Act (FOIA) request with the city soon asking for a full accounting of how that committed money will be spent.
If the city needs help fulfilling the FOIA request, "We'll get the high school math society to show up with their calculators," Tresser joked. "It shouldn't be a hardship for the city to account to us how this money is being used."
Zwiazek, who is also a teacher at Thomas Kelly High School in Brighton Park, said public school budgets are being decimated while the city sits on $1.7 billion in TIF funds.
"That (TIF) money could go into our schools," she stressed. "We can get our librarians back. We can get our teacher aides back. We can get our supply money back. We could get so much back."
UPDATE 1 (5:25 p.m.): In an interview with Progress Illinois, Ald. Michael Zalewski (23rd) defended the city's use of TIF money for the Shop and Save Market, located at 5829 S. Archer Ave.
After the Dominick's closed in 2007, the property fell into disrepair, the alderman said. The area also had only two main grocery stores after Dominick's left the community.
The $3 million TIF subsidy to renovate the former Dominick's property and construct the Shop and Save was made available to the developers over a 10-year period, Zalewski said. All the requirements under the redevelopment agreement have been met, he added.
"The store's open. It's beautiful. It's clean. It's a wonderful store," the alderman said. "We're very happy that they're in the area."
"Shop and Save is probably our biggest success story with TIF funding in taking a real eyesore of a closed-down Dominick's" and turning it into a "beautiful shopping center there," he added.
Regarding the donations Shop and Save made to his political campaign and the 23rd Ward Regular Democratic Organization, Zalewski said, "Yes, they did make one or two campaign contributions. I take it as a compliment that they were happy that they received cooperation from my office" to move into the former Dominick's site.
"I think if you talk to (Shop and Save) ... I'm sure they would say that nobody ever forced them or pressured them," he added. "Basically, they get an invitation in the mail like everyone else does when I have a fundraiser. If they participate, fine. If they don't, that's fine too."
The alderman fired back at Arteaga's comment that Shop and Save's campaign contributions "speak for themselves."
"This guy, Arteaga, is running for alderman," Zalewski continued. "He's going to be making all kinds of accusations, but I'm really not concerned about his accusations. The owners of the Shop and Save know what the truth is, and that they were sent an invitation. They responded, and that's pretty much it."
In response to concerns that the Shop and Save could be lost due to possible road construction in the area, Zalewski said IDOT's proposals do involve taking out the grocery store's parking lot. But he stressed that the overall project is still under consideration and in its very early stages.
"The funding to secure all the money to do a grade separation on Central Avenue and 54th Street is very wishful thinking," he said. "It's just very expensive."
If a grade separation does get put in, Zalewski said he would prefer to see it implemented at 65th Street and Harlem Avenue.
Other than the Shop and Save, Zalewski said TIF money has mostly been used to improve streets, curbs and sidewalks in the ward's TIF districts. He would like to see TIF funding used for more commercial developments.
Zalewski touched on a possible TIF project being discussed for the ward.
A local property owner, he said, has expressed interest in renovating a vacant restaurant in a commercial strip at Archer and Cicero avenues, with the hopes of bringing in a Starbucks. TIF money could be an option for that proposed project, he said.