By: Mark Glennon*
It’s not often that we’re on the same page with Tom Tresser of CivicLab and Ben Joravsky of the Chicago Reader. But on the central problem with tax increment financing in Chicago – their abysmal lack of transparency — we’re on common ground, along with most everybody else.
The concept behind TIFs seems sensible on its face: If a city pays for improvements or development incentives for a particular area, the cost should be recouped through property taxes on the windfall increase in valuation owners in that area enjoy.
In Chicago, however, they boil down to nothing more than this, as CivicLab puts it on their website: “TIF = Slush Fund.”
Chicago’s 136 TIF districts cover about a third of the city, according to Medill Reports, and in 2018 they collected a whopping $841 million in property taxes. TIFs are supposed to be for blighted or underserved neighborhoods, but downtown LaSalle Street is among the areas in a TIF. Those statutory standards are lax enough that even a section of swanky, suburban Kenilworth qualified for a TIF, as we wrote earlier.
But the real problem in Chicago is that they are indeed a slush fund, and an extraordinarily opaque one at that. TIF money for decades got diverted to pet projects de jour of whomever the mayor was, usually glamor projects like Navy Pier improvements.
Today, however, it’s pure necessity.
As reported by Greg Hinz at Crain’s on Tuesday, Mayor Lori Lightfoot’s administration quietly requested insertion of two lines in a 26-page bill passed last month by the General Assembly allowing her extend the life of a near-north TIF to provide $36 million to a housing development. The city explained that it was obligated to pay the money for replacement of low-income units required by federal court decree when much of Cabrini-Green was demolished.
But money is fungible and in mighty short for the city, so it’s pretty obvious that what’s really happening is TIF money is being used to make ends meet.
TIFs are a “shadow budget,” as Joravsky put it, because its impossible to know what’s going where or why. How much do the TIFs—with their annual take of hundreds of millions—add to Chicagoans’ property tax bills?
Here’s Joravsky’s candid answer, despite his years of detailed research on them: “I can’t tell you because I don’t know. I’m not privy to the information I need to make such calculations. Those who have the info aren’t talking, presumably because they don’t want you to know.”
Lightfoot in February announced TIF reforms including more transparency, more rigorous procedures and “equity” as the central focus of TIF subsidy decisions with pivotal input from Chief Equity Officer.
However, her reforms were widely criticized as being too little, too late. Joravsky likened reform to a game of three-card monte. “As for ‘reforming’ the cost part of the TIF by telling us, you know, how much they cost—don’t hold your breath,” he wrote. Block Club Chicago covered other critics. Part of the fight is over where the money should go – schools, housing or whatever.
Tresser is particularly critical of Lightfoot’s latest move and gave me the following comment. CivicLab would abolish them entirely and has a petition going on that.
The CivicLab is appalled at the back–room, opaque tactics being employed by Mayor Lightfoot to extend the life of the Near North TIF. Created in 1997 it has stolen a total of $292.5 million in property taxes from the units of government that rely on property taxes for operations. The biggest loser was, and will remain, Chicago’s stressed public school system. Since our public schools serve a majority student body of color, we call TIFs racist and that they need to be abolished. The pro-business Crain’s Chicago TIF-loving reporter Greg Hinz called the move by the Mayor “unusual and unheralded.” Well, we at the CivicLab have been heralding the hell out of TIFs since 2013 through deep research and 80 public forums. TIFs are racist, unfair, corrupting, and promote terrible planning and governance practices – like this one.
It’s safe to expect more raids on TIF money to make ends meet in Chicago.
How much more is available from TIFs?
Heck if we know. That’s part of the transparency problem. We have yet to identify what if any logic goes into the process of declaring a TIF “surplus” and what the total truly is. Last year, however, Lightfoot declared a $300 million TIF surplus, so the potential again is no doubt huge.
Count on plenty of fights over who gets it.
*Mark Glennon is founder of Wirepoints.