The TIF That Keeps On Taking 

The city has found a way to extend the life of its oldest, fattest tax increment financing district.

Good news, Chicagoans! Our coffers are overflowing, as tens of millions of property tax dollars pour in to revitalize the schools, the parks, the city, and the county. There's money for new books and new teachers, new police and fire equipment, expanded recreational services for poor kids who can't pay rising Park District fees—maybe even a rebate for overtaxed property owners. And it's all because around this time last year, the Central Loop tax increment financing district hit its 23-year anniversary. As everyone knows, TIF districts expire at the end of 23 years. Right?

Wrong. Yes, 23 years have passed since the city created the Central Loop TIF, and, yes, the city says TIFs expire in 23 years. But thanks to some fine print buried in the state laws governing tax increment financing, the Central Loop TIF—which, as the city's oldest and biggest TIF, has already soaked up roughly $900 million—will keep siphoning off tax dollars until at least the end of 2008.

To understand why, you'll have to sit through a little rudimentary background on tax increment financing. When the City Council, at Mayor Daley's urging, creates a TIF district, it freezes the amount of property taxes the schools, parks, county, and other taxing bodies get in that district. Additional revenue created by higher assessments or new development flows into the TIF account, essentially a slush fund controlled by the mayor. To compensate for that lost revenue, the schools, parks, county, etc are forced to raise their tax rates. As a result, TIFs raise everyone's property taxes. True, the city is always free to terminate a TIF before the end of its official 23-year tenure. Fat chance of that.

The city treats that 23 years as a sacred number. It's written into each piece of legislation that the City Council approves when it creates a TIF. It's written on the TIF fact sheet, distributed at public meetings and posted on the planning department's Web site. I've heard it uttered by planning department officials and aldermen at countless meetings and hearings over the years. I myself have used it dozens of times. But it means nothing.

Take the Central Loop TIF. Created by the council under Mayor Harold Washington on June 20, 1984, it was originally intended to pay for the redevelopment of Block 37, at State and Randolph. In 1996 the council deferred to Mayor Daley's wishes and OK'd an expansion of the district, which now covers almost all the property bordered by Michigan, Dearborn, Congress, and the Chicago River. When the TIF was created, the charter was quite clear about its expiration date: June 20, 2007. The Central Loop annual report for 2005 affirmed that the "project area may be terminated no later than June 20, 2007." But last year's annual report on the TIF read: "The project area may be terminated no later than December 31, 2008."

What gave the city the right to quietly extend the TIF for another year and a half? Back in 1999 the state amended the law to give all future TIF districts a life span of 24 years. The change came at the urging of Mayor Daley and city lobbyists, who argued that given the lag between the year taxing bodies levy property taxes and the year they collect them, the extra time was needed to allow them to collect their 23 years' worth of taxes. For good measure, the new state law also had a grandfather clause that allowed municipalities to amend previously created TIFs to last an extra year.

"Once the amended TIF law was passed, the city did not waste time taking advantage of the possible extension," says Jason Hardy, a research associate for the Center for Economic Policy Analysis, a local think tank. "The new law went into effect on November 1, 1999; on May 17, 2000, the city amended the Central Loop TIF to make the new expiration date December 31, 2008." All it took was a vote by the City Council.

But the city's argument is bogus—upping the expiration date does more than just let the TIFs collect a full 23 years' worth of taxes. Between June 1984 and the fall of that year, the Central Loop TIF collected $2,105,471.96 "to be exact," according to Courtney Greve, spokeswoman for Cook County clerk David Orr, who keeps the TIF books. That means it had already collected more than 23 years' worth of taxes by the end of 2007. Anything the TIF takes in this year—already about $48 million, according to Cook County treasurer Maria Pappas—is gravy. By December it will have collected 24 and a half years' worth of taxes.

Still, not even the city's own reports reflected the change until last year. And city records continue to claim that TIFs expire after 23 years. According to other 2007 reports the LaSalle Central TIF, "designated on November 15, 2006," may be "terminated no later than November 15, 2029," the Lawrence/Broadway TIF, "designated on June 27, 2001," may be "terminated no later than June 27, 2024," and so on. It's as though officials can't help themselves—when it comes to TIFs they feel compelled to bamboozle the public any way they can.

In fact, pretty much everything about the TIF program is shrouded in duplicity. Officials tell you TIFs don't raise taxes when of course they do—to the tune of $500 million just in 2006. (The Central Loop TIF alone collected about $110 million last year, about $55 million of which would otherwise have gone to the schools.) They say the TIF program is open and on the books, and yet it's not in any budget or even on your tax bill, which therefore misleads you about how your tax dollars are spent. By law TIFs are supposed to be used to generate development in blighted areas, yet there are TIFs in some of the city's wealthiest communities.

And this latest travesty may not be the last: word around City Hall is that Mayor Daley intends to try to extend the Central Loop TIF for another 15 years. He's playing his cards very cautiously on this move, which would require state approval. Planning department officials tell reporters that the mayor hasn't made up his mind. But statehouse insiders tell me that Daley is likely to ask house speaker Michael Madigan to tack the 15-year extension onto other legislation and slip it through the Illinois House when no one's paying attention. Of course it would still have to go through the state senate and be signed by Governor Blagojevich, and given the feuding in Springfield—and increased awareness of the TIF program's excesses—it may not be as easy to pass as that clever little one-year extension provision back in 1999.

If Daley succeeds, it will mean that well over $1.6 billion can be channeled from schools and parks into the Central Loop TIF over the next 15 years—or is it 16? Just in time for the Olympics, too.v

For more on politics, see our blog Clout City at chicagoreader.com.

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