By William S. Bike
As part of its analysis of Chicago’s 136 tax increment financing (TIF) districts’ 2020 annual reports, CivicLab and its TIF Illumination Project discovered that, in the 28th Ward alone, the City has more than $65 million in TIF money available for the ward’s needs that it is not spending.
The 28th Ward holds all or part of the Taylor Street/Little Italy, Tri-Taylor, University Village, West Loop, Pilsen, Little Village, Austin, East Garfield, West Garfield, and North Lawndale communities.
When the City creates a TIF— seven in the 28th Ward alone—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.
That money, without TIFs, would go to public schools, parks, libraries, and other needs.
“TIFs have often been characterized as a slush fund controlled by the mayor,” CivicLab reported in a document. “Our own work substantiates this claim.”
According to CivicLab, the 28th Ward not only has seven active TIFs but counts a whopping 77% of the ward located within a TIF. The amount of property taxes these TIFs removed from essential public services in 2020 was $20,658,811.
The City created all these TIFs between 1998 and 2002 during Richard M. Daley’s mayoral term. According to CivicLab, the amount of property taxes sitting in TIF accounts at the end of 2020 that came from the 28th Ward since the City created those TIFs in 1998, 1999, 2000, and 2002 is $65,197,778.
“So one way to talk about that number is, if we abolished TIFs and could return the money sitting in TIF accounts not to the units of local government but to a ward-specific fund, the 28th Ward would get a one-time cash infusion of $65.2 million,” said Jonathan Peck, CivicLab president.
A skim inside a skim
The City’s Department of Planning and Development in 2020 removed $1.1 million from the seven TIFs in the 28th Ward as “administration/staffing” costs. “This constitutes a skim inside of a skim,” said Tom Tresser, lead organizer for the TIF Illumination Project and vice president of CivicLab.
Chicago TIF money may be used in three ways: spent on approved projects within the ward; transferred to adjacent TIFs; and re-distributed back into “municipal sources”—local government.
In 2020, officials transferred $13,812,876 to adjacent TIFs—instead of spending it in the areas where those dollars were collected. “This process is mysterious; we’re not sure how it is initiated,” Tresser said.
Research shows officials transferred $45,266,000 back into local government. “The receiving units of government can then spend that money as they see fit,” Tresser explained. “It’s a one-time cash ‘gift,’ in that those sums were not planned or budgeted. The mayor triggers the re-distribution process by declaring a ‘surplus,’ and Mayors Richard M. Daley, Rahm Emanuel, and Lori Lightfoot have done this over the years.”
TIFs inside the 28th Ward are #048, Western/Ogden, scheduled to expire this year; #062, Roosevelt/Racine, expiration 2023; #064, Northwest Industrial, expiration scheduled for this year; #095, Midwest, expiration 2023; #075, Madison/Austin, expiration 2022; #086, Central West, expiration 2023; and #115, Chicago/Central Park, expiration 2025.
Gazette Chicago contacted 28th Ward Alderman Jason Ervin’s office for comment, but neither he nor his staff responded.
Alderman Byron Sigcho-Lopez of the 25th Ward, a progressive City Council member, thinks “the TIF program unquestionably needs reform,” he said. “The fundamental idea of preserving tax dollars for blighted communities is a good one, but as we’ve seen, it’s far too easy for TIF dollars to end up in the hands of wealthy developers who are not from the communities these dollars are meant to benefit,” he noted.
When asked if he believes Mayor Lightfoot should release TIF dollars for essential public services and infrastructure, Sigcho-Lopez said, “Yes. Over the past two years, despite the promises for TIF reform, the pressure of developers and corporations for subsidies has resulted in more TIF funds going to luxury housing and other infrastructure projects in affluent areas at the expense of the communities that need investment.
“Thus, TIF surpluses for public infrastructure based on need such as the Chicago Public Schools, libraries, parks, etc. are critical,” Sigcho-Lopez continued. “For instance, a majority of residents support the expansion of the Rudy Lozano Library in Pilsen to host the community’s historic archives and connect to our local schools and residents. However, we are not able to secure funding because the area is not included within the TIF zone. We have basic infrastructure needs in our local schools, parks, libraries, etc. and the current system does not allow for a fair allocation of funds.”
CivicLab personnel believe the TIF program is racist, because it draws much more money from Chicago’s minority communities than from White communities.
“Agree,” said Sigcho-Lopez. “When bid developments like The 78 and Lincoln Yards were able to secure $2.4 billion in TIF funding for luxury housing, while South Chicago is being forced to accept a metal shredder—previously located at the Lincoln Yards development area—despite the negative cumulative environmental effects and health hazards for residents, it is textbook environmental racism and showcases the use of TIF dollars going to affluent communities while polluters continue to flow in poor minority communities.
“We need to stop these practices and start investing TIF dollars in blighted communities or declare a TIF surplus to stop the misuse of these public dollars that in theory are supposed to help the most vulnerable communities, not to take away from them,” Sigcho-Lopez said.
When asked if Alderman Sigcho-Lopez would attempt TIF reform, a Sigcho-Lopez media spokesperson said, “Alderman Sigcho-Lopez has been vocal about the need for TIF reform from the start and has no plans to pull back.”
For CivicLab, log on to www.civiclab.us or call (773) 770-5714.