By William S. Bike
The City of Chicago has nearly $2 billion, shielded in tax increment financing (TIF) accounts, available to meet its needs and obligations. Yet the City is not spending the fiscal bounty, according to CivicLab and its TIF Illumination Project.
In a TIF 2021 meeting on Oct. 16, Tom Tresser, vice president and chief operating officer, reported that CivicLab analyzed Chicago’s 136 tax increment financing districts’ 2020 annual reports and found they collectively have $1,957,995,811 available.
The City created a TIF in the affluent South Loop to deliver a $1.1 billion subsidy to developers of The 78, which will include upscale housing, offices, and cultural and academic structures.
“We have to pull the numbers from each TIF district” to figure out the total, Tresser noted, because the City provides no single place to list the full dollar figure.
“Having a large, secret amount of money is not good for democracy,” Tresser said. “The 136 TIFs removed—stole—$820 million in property taxes in 2020 but spent only $415 million,” he added.
TIFs are “designed to subsidize development projects in ‘blighted’ or underserved areas that could not be funded by the market,” Tresser explained. When the City creates a TIF, the City and County governments freeze the amount of taxes collected in the TIF for 23 years at the first year’s rate, known as the “base” amount. All taxes above that amount collected for the next 22 years—renewable for an additional 11 years—go to the TIF fund completely controlled by the mayor instead of to education and other essential public services.
“TIFs have often been characterized as a slush fund controlled by the mayor,” the Civic Lab reported in a document provided at the meeting. “Our own work substantiates this claim.”
Effects on local community
“The definition of ‘blight’ is meaningless,” Tresser said, noting TIF funds often go to projects in rich areas. He cited a local example, noting the Mariano’s supermarket construction at 40 S. Halsted St. in the affluent West Loop “got $7 million in TIF money.”
CivicLab analysis highlighted other questionable TIF uses in this community.
The document showed that, in the waning days of Rahm Emanuel’s mayoral administration, the City created the Roosevelt/Clark TIF #184 in the affluent South Loop to deliver a $1.1 billion subsidy to developers of The 78, which will include upscale housing, offices, and cultural and academic structures.
“Rahm Emanuel was desperate to pass this before he left office, before new aldermen and the new mayor could stop it,” Tresser said.
CivicLab reports that, in 2020, eight TIFs out of the City’s 136 used property taxes to pay a combined $73.8 million in finance charges to Amalgamated Bank and Zions Bank alone. The 78 deal included $400 million in finance fees to go to banks instead of to City coffers—“to Wall Street,” Tresser noted.
“That’s our analysis of The 78, and we give Emanuel an F,” Tresser said.
Parts of local communities in the 28th Ward include Taylor Street/Little Italy/Near West Side, Pilsen, Tri-Taylor, University Village, and the West Loop. CivicLab analysis revealed the ward “is the fifth most TIF’d ward in the city,” Tresser noted. It has seven TIFs, and a whopping 77% of the ward is located in a TIF.
The 12th Ward, which includes Brighton Park and McKinley Park, has eight TIFs as well.
Former 25th Ward Alderman Danny Solis and 14th Ward Alderman Ed Burke, by virtue of City Council committees they chaired, “were the czars of TIFs for years,” Tresser said, noting Solis “wore a wire for the Federal Bureau of Investigation for two years and disappeared, and Burke is under indictment.”
Mayor Lori Lightfoot has touted her Invest South/West initiative, ostensibly designed to improve Bronzeville and nine other neighborhoods. CivicLab points out, however, that Invest South/West will receive only $250 million in TIF money for 27,588 acres of land, while The 78 and the North Side Lincoln Yards project have gotten $2.4 billion in TIF funds for an area of only 303 acres.
“You might as well call it Disinvest South/West,” said Jonathan Peck, CivicLab president and CEO.
Such outcomes show that TIFs, as implemented by the City of Chicago, are racist, CivicLab personnel believe. The presentation showed that, of the money in the fund, the City took 49.5% from predominantly Black wards, which comprise only 36% of the City; 17.4% from predominantly Latinx wards; and 27.7% from predominantly White wards—where the City often spends TIF money.
“A good portion of that is being taken away from Black and Brown neighborhoods—hundreds of millions of dollars,” said Peck.
Invest South/West plans for predominantly Black and Brown communities remain much more modest than those of The 78 and will receive a much smaller amount of TIF money. “Call it Disinvest South/West,” said Jonathan Peck.
“In addition, TIFs often are dinged for administrative fees,” Tresser explained. “For example, the Department of Planning took $12.3 million from TIF funds for administrative costs.”
The Oct. 16 meeting also revealed TIF money legally is designated only for “hard” (construction) costs, and the City cannot use the funds for social services or other needs unless the mayor decides to move them to the regular City budget. “This serves the developers who contribute to the politicians,” Tresser said.
TIFs encourage ‘pay to play’
The presentation noted Solis, for example, received $64,100 in campaign contributions from a project that received $9 million in TIF funds—“a great example of ‘pay to play,’” Tresser said.
Mayors and aldermen often see to it that TIF funds go to favored developers and campaign contributors.
“We’re not against people building and making a profit,” Tresser said. “Just do it on your own dime—not the public’s dime.”
Today, 30% of the City of Chicago is located within a TIF.
“TIFs have removed $10 billion from Chicago property taxes since 1986,” Tresser said. “That is a huge, huge number.”
That money, without TIFs, would go to public schools, parks, libraries, City colleges, and other needs. “TIFs grab 15% of the property taxes collected by the City of Chicago every year,” Tresser said, noting CivicLab’s “number one issue with TIFs is that they bleed the public schools.”
Audience member Carmen L.C. Palmer, PhD, founder of the Educational Village Keepers organization, noted Chicago Public Schools problems such as large class sizes, lack of science laboratories and libraries, and lack of cleanliness and safety could be helped if the CPS got its money back from TIFs.
Another audience member, Peter Marinelli, said the Lightfoot “administration in my opinion treats CPS like a nuisance and students and teachers like second-class citizens.”
Thirty percent of the City of Chicago is within a TIF and this community has many. A whopping 77% of the local 28th Ward sits within TIFs.
Tresser noted CPS has a nursing shortage; most CPS schools no longer have librarians; CPS still uses private contractors for maintenance, which he described as “a source of corruption and bribes”; and special education remains in disarray three years after the State ordered reforms.
“If that $1.9 billion in TIF money were returned to the units of government who should have gotten it in the first place, the CPS would get $1 billion,” Tresser said.
“TIFs have nothing to do with economic development,” Tresser concluded. “Ninety percent of the time they don’t work, and handing out TIF money after a company has already located to a TIF area”—something the City does frequently—“makes no sense at all.”
Community empowerment
“Our purpose is to help people get illuminated about TIFs and get them working on getting money back to communities,” Peck said.
CivicLab and the TIF Illumination Project are doing so “in over a dozen municipalities all over the country, because you see TIFs expanding all over the country—fattening the pockets of developers,” Peck said.
“We offer coaching and training on budget and finance auditing and provide skills to take on the politicians and developers,” he added. “There will be an effective campaign to end TIFs in Chicago and get those dollars to go back to public services. There is no need for people to be struggling in terms of food, housing, and workforce development. The money is there. Unfortunately, this current mayor would rather spend time shaming opponents than providing money for public services.”
The Office of the Mayor did not respond to a request for comment for this article
For information, log on to www.civiclab.us, or call (773) 770-5714.