Aug 2, 2011
Bronzeville residents turned out in impressive numbers for last Thursday’s public forum of the Mayor’s Task Force on TIF Reform, which was held at the Bronzeville Chicago Military Academy.
Other communities were represented, but more forums in additional communities would certainly offer the task force greater breadth of public input. But last week’s was the only hearing that is planned.
Bronzeville is one of the city’s most heavily TIFed communities, with thirteen TIF districts covering 80 percent of the area, many created to finance CHA redevelopments – with more in the works had Mayor Daley won the 2016 Olympic games, according to Housing Bronzeville.
Sheila Carter testified on behalf of the group that TIFs have “failed local taxpayers” in their lack of transparency and accountability. It’s been “virtuallly impossible for local residents to understand how TIF monies were being raised and spent in our area,” she said, suggesting “this confusion and lack of documentation was intentional.”
She slammed Daley’s skimming of $10 million from the King/47th TIF to help fill last year’s budget gap, saying it was done without community consultation. “No TIF money is ‘surplus’ in Bronzeville when our development needs are so great,” she said.
And TIF projects driven by outside developers and downtown planners have ignored long-range planning by local organizations, she said.
A housing plan for Bronzeville
In referendums held in 2004 and 2008, Housing Bronzeville won overwhelming voter support for a proposal to create a Bronzeville Housing Trust Fund to develop affordable housing on 500 of the nearly 2,000 city-owned vacant lots in the area.
The group was in discussions with the city over a pilot project along those lines, possibly using TIF funds to cover some costs, but talks are on hold since the new administration entered office, Rev. Jeffrey Campbell, executive director of the Lugenia Burns Hope Center, told Newstips.
Among many other Bronzeville residents who spoke, Sandra Bivens of the 51st Street Business Association proposed using neighborhood business groups which serve as delegate agencies for the city to monitor TIFs and conduct outreach to residents. “The community has yet to see a report on the number of jobs and small businesses created by TIF,” she said
Bernard Loyd, a local entrepreneur who’s getting TIF funding for a commerical development at 51st and Prairie, pointed out that Bronzeville TIFs have heavily favored residential projects and done little to create local jobs. The program is geared toward large corporations, and approaches aimed at small businesses should be included, he said (more below).
Pilsen, Englewood, Austin
Other communities were represented. “In Pilsen, TIF has been used as a tool to eliminate affordability and displace working-class families,” said Rosalie Mancera of the Pilsen Alliance.
“In Pilsen, TIF has not benefied the larger community; it has benefited private developers.,” she said. “We are subsidizing our own displacement. This is wrong.”
Cherice Price of the Residents Association of Greater Engelwood called for training elected officials so they can promote TIF opportunities to district residents. “People in our community may not even know there’s a TIF, and they don’t know how to go about applying,” she said. “It’s people outside our community who are taking advantage of the opportunities.”
She called for a single advisory committee that would provide local oversight for several TIFs in Englewood.
Dwayne Truss of the South Austin Coalition challenged task force chair Carole Brown’s assertion that “TIF collections do not come at the expense of other taxing bodies.” (In fact, as all readers of Ben Joravsky know, TIFs freeze property tax revenues going to the city, county, schools, and parks, and divert any additional revenue to a separate development fund.)
“We know that the money you give to corporate welfare comes out of our communities,” Truss said. He called for an emphasis on jobs, pointing to a $3 million subsidy to Coca Cola to move a bottling plant from Little Village to Austin (AustinTalks recently reported the plant employs only 28 residents of the Austin area). “How many teachers, how many park district jobs, would that money have saved?” he asked.
Community leaders representing the Albany Park Neighborhood Council, Lakeview Action Council, Kenwood Oakland Community Organization, Action Now in Englewood – and Melody McCorey, a young homeless mother of four small children, for the Chicago Coalition for the Homeless – testified in favor of Sweet Home Chicago‘s proposal to devote $100 million in TIF funds for rehabbing foreclosed properties as affordable housing.
Amisha Patel of the Grassroots Collaborative called for shutting down the LaSalle Street TIF district, calling it an “egregious misuse of public funds.” The city should declare a TIF surplus and return $200 million from downtown TIFs to the tax base, she said.
She called for dedicating $100 million to affordable housing and pulling CPS out of the TIF program. “Given the economic crisis that we are in, it makes no sense that the city holds on to over $850 million in tax dollars, while our communities are struggling,” she said.
TIF funds “shouldn’t be going to make rich corporations richer” while class sizes are increasing, said Kristine Mayle of the Chicago Teachers Union.
Wendy Katten of the Raise Your Hand Coalition expressed disappointment that, despite promises of reform, the city just approved $7 million for an upscale grocery store in Greektown. CPS’s share of that money would have provided music or language programs for 50 elementary schools with 25,000 students, she said.
“Our schools are in dire need of the tax money that is being diverted from them, and our children can no longer afford to lose teachers and programs,” she said.
Katten called for sunsetting TIFs “that have served their purpose” and restricting new TIF designations to blighted areas. She urged the task force to consider removing CPS from the TIF equation.
In the 47th ward, where she lives, “we have million-dollar homes and six TIFs diverting money from schools,” she said. “It’s a shame.”
One size doesn’t fit all
Bernard Loyd’s Urban Juncture is developing a “culinary destination” in a large turn-of-the-century building at 51st and Prairie – four restaurants, each featuring different aspects of black cuisine, and a produce market, with 140 jobs projected. TIF funding has been approved to cover $3 million of the project’s $9 million cost.
As a former partner at McKinsey and Co., a major management consulting firm, he’s become well-versed in the differences between big and small business. The way the TIF program is structured and administered is fundamentally geared toward large corporations and developers, he said.
Businesses don’t operate that way, he points out. “When GM is selling to Avis or to an individual consumer – they want to make the sale in either case – but everything is different, the sales effort, the terms – even the car will be different.”
With TIF, it’s the same application process, the same basic deal structure. “In the vast majority of projects outside of affordable housing, a developer or a corporate entity has brought it to the city, and the city is reacting,” he said. “That reactive posture puts the onus on the community to generate opportunities, and that’s part of the reason you have very skewed usage of TIFs.”
In Bronzeville that means five TIFs with nearly $100 million in revenues have generated only nine projects, seven of them residential, and only one (Urban Juncture’s) commercial.
The city needs to develop “a much more proactive and streamlined approach” to promote community economic development, he said. “There’s a huge need to educate business folks and residents about what [TIF] is and how it can be used.” (At this point, the city’s Department of Housing and Economic Development “doesn’t have the resources to do a lot of outreach,” he said.)
Capital rich, capital poor
And while corporations have easy access to capital and residential developers can tap a range of public funding sources, getting private financing for a commercial project in a neighborhood like Bronzeville is a very tough climb. There may need to be flexibility in the proportion of costs TIF will cover — and in the way deals are structured.
The typical TIF deal is back-end loaded. “For a corporation it’s a sweetener, and they have a hundred other places they can go for cash. We’re in Bronzeville, virtually cut off from capital,” said Loyd. “We need money up front. But the city tells us, hey, great project, we’re going to help, and by the way, when we get a certificate of completion, then you’ll get payment.”
City development staff “really worked with us” to get a TIF note which Urban Juncture could borrow on, “but it was a whole long negotiation,” Loyd said. And some of the funding is still being held back. (Loyd’s group has invested $1.5 million in the project and is working with nonprofit lenders.)
“The city is used to working with huge corporations,” said Loyd. “But a process that will work for United is almost certainly not going to work well for us.”
“We need to realign our thinking as a city to invest in neighborhoods, because it is not trickling down from downtown,” he said. “Many of our neighborhoods are in bad, bad shape, and we have to do a lot better creating jobs for residents. We’re not capturing the opportunities.”