By William S. Bike
The latest analysis by CivicLab and its TIF Illumination Project show the City of Chicago has more than $2.5 billion shielded in tax increment financing (TIF) accounts available to meet community needs and obligations. Yet the City is not spending that money.
TIFs are “designed to subsidize development projects in ‘blighted’ or underserved areas,” explained Tom Tresser, CivicLab vice president and chief operating officer. When the City creates a TIF, it freezes the amount of taxes collected in the TIF for years, and sometimes decades, at the first year’s rate, which is known as the “base” amount. All taxes above that amount collected for the life of the TIF go to the TIF fund instead of to education and other essential public services such as public schools, City colleges, and public libraries.
TIF money is supposed to go to community improvement, and occasionally does, such as when the Chicago Transit Authority built a new Green Line station at Damen Avenue and Lake Street. More than $2.5 billion, however, continues to sit unused and unspent in TIFs.
“TIFs remove property taxes from the proper public flow or distribution to units of local government who rely on property taxes for operation,” CivicLab explained in a statement. “These public dollars are then doled out in an opaque and unaccountable manner to clouted developers and special projects with little or no oversight, evaluation, or possibility of redress.
“TIFs manipulate and remove hundreds of millions of dollars of property taxes annually,” CivicLab charged.
In the CivicLab and TIF Illumination Project’s last analysis of 2021 TIF figures, Chicago had more than $2.5 billion of property tax revenues sitting in its 132 active TIF accounts, an all-time high, as reported in Gazette Chicago earlier this year. Their analysis of 2022 TIF figures now shows a new all-time high of $2,537,526,915 in 131 active TIF accounts, as of Jan. 1 of this year.
The total TIF extraction, “diverted from local units of government” and away from community needs and into TIFs for 2022 alone was $959,702,231, according to the CivicLab.
“Chicago’s TIFs…have removed a staggering total of $11,209,550,479 in property taxes” away from public use from 1986 through 2022, according to CivicLab.
“The biggest property tax remover in 2022 was the LaSalle Central TIF #147…which took in $161,059,713,” according to CivicLab. That TIF covers parts of the Loop, West Loop, and South Loop.
“This one TIF has removed a total of $799,470,721 in property taxes away from local units of government since it was created in 2006,” CivicLab noted.
The largest balance of unspent TIF funds is in Kinzie TIF #52, a total of $266,651,096. That TIF runs through the West Loop, Near West Side, and West Side from approximately Halsted Street to Kedzie Avenue.
On the positive side, that TIF in 2022 also was number one in paying out funds for community projects, spending $24,824,649. More than $12 million of that money went to Chicago Transit Authority Green Line station construction at Lake Street and Damen Avenue.
Unfair distribution
The City’s 18 majority Black wards and 13 majority Latinx wards with TIFs got the short end of the stick in terms of community expenditures compared to Chicago’s 14 majority White wards. Even though the City counts more majority Black wards and a similar number of Latinx wards compared to majority White wards, majority White wards saw $114,320,226 in expenditures in the community compared to $104,535,065 in majority Black wards—even though Chicago has more Black wards—and only $48,412,596 in majority Latinx wards.
Since Pilsen’s TIF #54 creation in 1988, it has removed more than $230 million in property taxes that could have been spent for community needs.
“At the end of 2021 we saw $1,072,292,539 in property taxes taken from Black wards sitting in the TIF accounts,” CivicLab noted. “This is an abomination. Why wasn’t that money liberated and put to use for emergency public services and support for those hardest hit communities?”
Some wards have no racial majority or no TIFs, so therefore they were not counted.
CivicLab also discovered that some money that could have been spent on the community instead went to finance costs of $28,531,437 paid to two banks.
Based on research by Cook County Assessor Fritz Kaegi, CivicLab claimed the impact of all TIFs in Cook County is to raise property taxes by 15% overall.
If Mayor Brandon Johnson “wants to deal with the old TIFs in a new way, he should move to freeze and then abolish them,” CivicLab asserted. “This would be a major step towards fulfilling his pledge to make Chicago’s budget and its finances more equitable for her people.
“The entire TIF process is fraught with mystery and opacity; TIFs remain a slush fund,” according to CivicLab. “TIFs have often been characterized as a slush fund controlled by the mayor. Our own work substantiates this claim. We have shown here than in 2021 52% of all the TIF funds collected in Chicago are moved out of the area where the dollars have been collected and distributed in a secretive and arbitrary manner.”
Despite more than $2.5 billion sitting unused in TIF coffers, CivicLab noted, elected officials, media, and civic groups “repeat the message that we are out of civic funds and that we must pay more in regressive taxes and fees and suffer service cutbacks. The message of scarcity rings false.
Call for abolition
“Tax increment financing in Chicago is a racist, unfair, and corrupting program,” according to CivicLab. “TIFs do not work and cannot work in any equitable manner. We call for the abolition of TIFs in Chicago.”
CivicLab CEO Jonathan Peck added, “The CivicLab’s TIF Illumination Project continues to unearth how public dollars and resources are being utilized to enrich the pockets of a cabal of politicians and developers who seemingly have the sole interest of lining their campaign war chests and their own pockets at the expense of taxpayers. The racist and corrupt tax increment financing scheme continues to rob billions of dollars from communities…and diminish much needed public resources.”
Interns working as part of the Metropolitan Chicago Data-Science Corps collected the 2022 TIF data. Philip Yates, associate professor of mathematical sciences and statistics at DePaul University, was project supervisor, Will Fineberg and Andres Meza from DePaul University and Mavis Wang from Northwestern University were the interns. CivicLab’s Tresser supervised the project.
CivicLab promotes civic engagement, government accountability, and social justice. The Metropolitan Chicago Data-Science Corps is a collaboration of non-profit and community organizations, data science students, and experts from several local universities addressing challenges and opportunities relevant to the community through data analysis.
For CivicLab information, log on to www.civiclab.us or call (312) 566-8180. For Metropolitan Chicago Data-Science Corps, log on to https://sites.northwestern.edu/mcdc.