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Time for TIF reform?

Chicago teachers and community groups will call for an end to big business TIF giveaways which are draining the CPS budget at a rally tomorrow (Saturday, March 19, noon) at Jenner Elementary, 1119 N. Cleveland.

After the rally they’ll march to a number of businesses around the Gold Coast that have received TIF funding, said Jackson Potter of the Chicago Teachers Union.  TIF funds (including subsidies to developers) have benefited such corporations as Bank of America, Goldman Sachs, and the Chicago Mercantile Exchange, he said.

The TIF program diverts about $250 million a year from the CPS budget to “wealthy developers, well-connected businesses, and Wall Street bankers,” while 160 CPS schools have no library, teachers are being laid off, education programs are cut and class sizes are growing, he said. CPS is projecting a $700 million deficit for the coming year.

The protest’s slogan is “TIFs Are For Kids.”  It comes at a time when TIF reform seems to be under serious consideration in Springfield, and a new mayor-elect is saying he wants reform too.

It’s not yet clear what Rahm Emanuel means by “reform.”  He began his campaign calling for greater transparency on TIFs – for one thing, including them in the city budget – and also for skimming TIF funds to hire more police, a move many think is probably not legally feasible.

Since winning election Emanuel has said “we need to return [the TIF program] to its original purpose,” as “a tool for blighted communities” rather than “for high-rent areas.”

Corporate welfare

That echoes the long-standing criticism of community groups, who say TIF has diverted property tax revenues to politically-favored areas and businesses that don’t need it, and that open-ended rather than project-specific TIF plans have accumulated hundreds of millions of dollars for Mayor Daley to use for his friends, at his whim.

Building on years of coverage at the Chicago Reader, recent reports have confirmed this view.  According to reporters from Chicago Talks, nearly half of the $1.2 billion in TIF money designated for private sector projects since 2000 went to some of the area’s most profitable corporations.

According to the Chicago Reporter, $1.2 billion in property tax dollars were siphoned from the city, county, schools, and parks to the development projects in the Loop and Near South Side – just two of Chicago’s 77 community areas getting 55 percent of all TIF money spent between 2004 and 2008.

“We’ve been saying for a long time that they have been abusing it,” said Carolina Gaete of Blocks Together.  “They’re starving the taxing bodies.  TIF has really been used as corporate welfare — and a tool for gentrification.”

If Emanuel is serious about returning TIF to its original purpose, the first thing he should do is sunset the LaSalle Central TIF, said one long-time observer.

Created in 2006, the LaSalle Central TIF has funneled millions of dollars to major corporations – United Airlines, Miller Coors, the Chicago Mercantile Exchange Group among others – in many cases to renovate corporate offices.

The LaSalle Central TIF has over $36 million in available funds this year.  It’s expected to collect $1.5 billion over its 23-year life – about half of which will come from property tax that would otherwise go to CPS – for use in an area that comprises some of the city’s most prime real estate.

“There should never have been a TIF in that area,” said David Merriman of UIC.

Movement in Springfield

Meanwhile, a number of measures reforming TIF have been introduced in Springfield, including proposals to return uncommitted TIF funds to taxing bodies annually, exempt CPS revenues from TIF diversions, and require audits of Chicago TIFs and stepped-up disclosure (Progress Illinois has a list).

These are likely to be combined with other proposals into a single consensus bill by a group of legislators and advocates convened by Rep. John Taylor (D – Marion).  And prospects for passage this session look good, said Jonathan Goldman of Parent PAC, a new group that advocates for public school parents, which includes veterans of campaigns against the diversion of school funds to TIFs.

Growing momentum for reform reflects growing popular awareness about TIFs — as well as the mounting financial challenges faced by CPS and Chicago, Goldman said.  “And part of it is that Daley is leaving; he won’t be there to defend it,” he said.  Previously “people were afraid to go there.”

Housing Action Illinois, which helped push through earlier TIF reforms a decade ago, has compiled a list of TIF reform principles and submitted it to Bradley’s working group, Bob Palmer said.

These include: tightening up the definition of “blight” used to qualify TIF plans; limiting the land area in a municipality that can be TIFed; requiring explicit goals and purposes, with a process for returning revenues to taxing bodies when goals are met; requiring governing boards of taxing bodies to approve participation in a TIF, allowing them to limit their participation, and limiting TIF diversions to property value increases above the rate of inflation; and setting a process for declaring a surplus and returning unused revenues to schools districts and other taxing bodies.

Similar points are made in a memo to the working group from the Better Government Association.

Another proposal backed by Housing Action, designed to facilitate the Sweet Home Chicago ordinance, would allow TIF funding to cover 100 percent of the cost of construction of low-income housing.

More sunshine

In Chicago, reform could mean fuller implementation of the TIF Sunshine Ordinance approved in 2009.  Ald. Scott Waguespack (32nd Ward), coauthor of the measure, described his disappointment with its implementation to Chicago Talks – including the city’s claim that documents that should have been posted couldn’t be located.

Community activists monitoring neighborhood TIFs say it’s still hard to get information.  Gaete, who works with the Chicago Central Park TIF advisory council, says it’s not clear how officials come up with financial projections and other numbers.

Valerie Leonard of the Lawndale Alliance, who holds an annual town hall meeting reporting on seven TIFs around North Lawndale, said its impossible to learn how many community residents have gotten jobs or what minority contracts have been awarded.

Special programs which are supposed to provide TIF support for residents – including home improvements, small business support and job training – use TIF money but aren’t listed in TIF budgets, making them impossible to track, she said.

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Category: city budget, CPS, development, school funding, taxes, TIF

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One Response

  1. Grady Norwood, Jr. says:

    WE THE BLACK COMMUNITY NEED TO COME WITH PLANS TO UTILIZE THE VARIOUS TIF DISTRICTS TO BENEFIT US AS ECONOMICALLY DEPRESSED COMMUNITIES THE PEOPLE(DEVELOPERS) WHO HAVE PLANS FOR OUR COMMINTIES ARE THE BENEFICAIRIES OF TIF AND ALL OF THE OTHER SUBSIDIES AWARDED TO DEVELOPERS. THE BLACK COMMUNITY NEED TO BECOME DEVELOPERS INSTEAD OF SOCIAL WORKERS.


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