Lucky Loyola

Just months after securing millions in TIF funds from the city, the tax-exempt religious institution bags another big handout from the state.

By Ben Joravsky
July 7, 2006

IT'S BEEN A good year for Loyola University. In October the city awarded the school up to $46 million in tax increment financing dollars for the renovation of several buildings on their north lakefront campus. In May the Illinois General Assembly quietly slipped it another $8 million for the very same project. Loyola officials were never required to explain publicly why they need the additional $8 million, or how the funding will benefit the state that’s giving it to them. Indeed, most of the state reps I talked to didn’t know that Loyola had already been the beneficiary of a TIF deal.

The state aid came to light only because of vying between house speaker Michael Madigan and Governor Rod Blagojevich over deals made during budget negotiations, when legislators trade their votes in exchange for a little pork. In the last few years the wheeling and dealing has become fraught with tension. The legislators say Blagojevich can’t be trusted: “I told Madigan that a commitment from this governor has a life expectancy of 24 hours, and he said I was doing better than he was,” says one state rep. The legislators are sore because “they just can’t stand it when we say no, and sometimes we have to,” says one gubernatorial aide.

Three years ago legislators began demanding that administration officials put the governor’s promises in writing by signing a “memorandum of understanding.” And last year Madigan started posting these so-called MOUs on the Illinois House Democrats’ Web site, www.housedem.state.il.us. Many legislators says Madigan’s trying to embarrass Blagojevich by calling attention to his reputation as a double-crosser. But Steve Brown, the speaker’s chief spokesman, says the postings have nothing to do with politics. “We believe in open government,” Brown says.

Among the MOUs is a May 9 document in which the state agreed to provide $8 million to Loyola University “for capital costs associated with redevelopment of the University’s Mundelein Center Skyscraper Building.” The agreement was signed by Jan Grimes, director of the state’s Capital Development Board, and Father Michael J. Garanzini, president of Loyola.

The Capital Development Board is the “state’s construction management agency,” says David Blanchette, the board’s public information officer. “We either manage or fund virtually all of the state construction projects. Since this is using state funding they are passing it through us.”

It’s not clear who initiated the Loyola handout. No local legislators are taking credit, as state rep Larry McKeon did when he got the state to sign an MOU committing $13.4 million to a Truman College construction project. McKeon and fellow north-side reps John Fritchey and Julie Hamos all say they had nothing to do with the Loyola deal. I called state rep Harry Osterman, whose district includes Loyola, but he never got back to me.

Most of his colleagues doubt Osterman has the clout to deliver $8 million for the school. “There’s really only one member who can get this through at the last minute,” says one state rep. “This clearly comes from the speaker’s office.” As more than one observer points out, Madigan graduated from Loyola; his daughter, attorney general Lisa Madigan, got her law degree there. Shirley Madigan, the speaker’s wife, used to sit on Loyola’s board, as did Bill Daley, Mayor Daley’s brother. One state official cracks, “I know alums like to give back to their colleges, but usually they do it with their own money.”

Madigan’s spokesman Brown downplays the speaker’s role in awarding the $8 million to Loyola. “A lot of people made a compelling case for this project,” he says. But it’s hard to see how. The MOU declares the project in the best interest of the state and its residents on the grounds that Loyola “seeks to expand the horizon of its students’ understanding of themselves in relationship to the wider world.” In the meantime the public is paying roughly $54 million of an $85 million construction project that benefits a private university charging $26,150 annual tuition and blessed with a growing endowment that now stands at about $260 million.

In other cases of state largesse there’s at least a significant potential payoff: the $8 million Northwestern University has been promised is to go toward a regenerative medicine wing at the Robert H. Lurie Medical Research Center, and DePaul University’s promised $9 million will go toward building a new science center. For their part, Loyola officials say they intend to offer community drama and art programs in the newly renovated Mundelein Center.

The Loyola grant is particularly difficult for local taxpayers to swallow coming as it does on the heels of funds from a TIF, a City Council-created district in which property taxes are diverted from the schools and parks and county to subsidize economic development. The central idea behind TIFs is that the tax dollars forfeited during their 23-year terms will eventually be offset by increased property tax revenues. But on this deal the city will get exactly zero in return for its millions: as a nonprofit institution, Loyola University is tax exempt. Even worse, the city will take a loss in revenue: $2 million of the Loyola TIF funds went to buying the Root Photographers building at 1131 W. Sheridan for use by the school, converting taxable property into a facility that’s tax exempt.

At a hearing on the TIF deal held last September, city officials claimed Loyola needed the TIF money because it wasn’t eligible for other kinds of governmental aid. Loyola “is requesting TIF assistance because of the extremely high costs associated with renovation of the historic Mundelein Center and surrounding buildings,” said Michelle Dewlen, a project manager for the city’s Department of Planning. “As a nonprofit institution, Loyola will not be eligible to benefit from federal, state, or city tax incentive programs which might otherwise be available to help reduce renovation costs.”

In view of the recent state grant, some local critics suggest Loyola return at least $8 million in TIF funding. But 49th Ward alderman Joe Moore, who along with 40th Ward alderman Patrick O’Connor shepherded the TIF deal through the City Council, says Loyola deserves every penny it gets: “Loyola is a good neighbor. If they can convince the speaker to cover more of their costs, God love ’em.”

Symbolically, however, the timing of the latest aid couldn’t be worse. While the state’s sending money to private universities, the city’s public schools are again on the verge of going broke. On June 28, in addition to approving the maximum tax increase allowed by state law and despite the protests of educators and impassioned pleas from deaf children and students in wheelchairs, the Chicago Board of Education voted to cut $26 million from its special education budget.

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