Repeat After Me: TIFs Are Great

Why would the Cook County Board give up a chance to have some control over how the city spends property taxes?

Mike Werner

By Ben Joravsky
October 6, 2006

FOR THE PAST several years Cook County Board commissioners have been promoting themselves as fearless reformers protecting the beleaguered property tax payer by taking bold stands against former board president John Stroger.

Well, on September 28 the commissioners got a chance to prove their independence in a big way by standing up to Mayor Daley, a politician far more powerful than Stroger, on an issue that could cost taxpayers millions of dollars. Alas, after only a few phone calls from the mayor's aides and aldermen, the commissioners ducked the challenge and ran the other way.

The issue is tax increment financing -- apparently Daley's favorite program and for good reason. Intended to spur development in blighted communities that would otherwise get no investment, the TIF program is so riddled with loopholes that any community can qualify (which is why the Loop has one TIF and is about to get another), and Daley gets to spend the proceeds pretty much any way he wants. There's no annual TIF budget or independent oversight, TIF revenues aren't itemized on property tax bills, the program claims $400 million (and rising) a year in property taxes, and most taxpayers don't even know it exists.

Each TIF is recommended by Daley and approved by the City Council. If the aldermen had any guts they'd rein in the program, but they know how much Daley likes it -- "it's untouchable," one north-side alderman told me. So they back off.

It's left to the county commissioners to take a stand. Why them? To understand the answer you have to know a little about how TIFs work -- don't worry, I'll keep it brief. TIFs are districts where property taxes flowing to taxing bodies such as the schools, parks, and county are frozen. If those taxing bodies got $10,000 out of a TIF district when it was created, that's pretty much all they'll get until the TIF expires in 23 years. The additional property tax revenues generated by rising assessments and new development are immediately rebated by the taxing bodies back to the TIF district, which is controlled by Daley and the local aldermen (provided they're well behaved). The more TIFs the city makes, the fewer the properties the taxing bodies can draw added revenue from. Thus, the schools and parks must raise their tax rates even more to compensate for the money they're losing to the TIFs.

Now you can understand why Daley likes TIFs so much. It's all about control. Daley gets hundreds of millions of dollars, and the other guys get blamed for raising taxes. Afterward, the mayor tells the public he's holding the line on property taxes.

You'd think the county commissioners would be up in arms over TIFs, which diverted about $50 million in 2005 (and the amount is growing) from the county. But despite a predicted budget deficit of close to $500 million over 2006 and '07, for the most part the commissioners have been quiet. Some don't understand the TIF issue and others don't care, and most know enough not to challenge Mayor Daley. (Daley's brother, Commissioner John Daley, is chairman of the County Board's all-important finance committee.)

But things changed this summer when Commissioner Mike Quigley raised a fuss over the proposed LaSalle Central TIF, the second downtown district, which will divert at least $550 million dollars from the taxing bodies over the next 23 years. According to Quigley, if the county's going to get serious about cutting its budget it has to take a stand on the TIFs, particularly TIFs in wealthy areas like the Loop.

This summer Quigley introduced three TIF-reform proposals: a resolution calling on the County Board to urge the General Assembly "to amend the state's TIF legislation to refocus the program on its original purpose of helping truly blighted areas"; an ordinance requiring any municipality (including Chicago) to notify the finance committee of any proposed TIF, so it can hold a hearing; and, most provocatively, an ordinance requiring the county to acknowledge TIF taxes on property tax bills. As it now stands, the tax bill lies. It tells taxpayers they're paying more to the schools and parks, etc, than those bodies are actually getting, as the TIF funds are only briefly and nominally in their possession. Quigley wants each taxpayer to be able to see how much money TIFs take every year.

Through his brother, Mayor Daley let the commissioners know he considered Quigley's proposals an unwarranted intrusion into city matters. (The last thing Daley would want is for the state to tighten TIF regulations.) Only 4 of the board's 17 commissioners -- Jerry Butler, Bobbie Steele, Carl Hanson, and Tony Peraica -- signed on to Quigley's proposal, and Steele later asked Quigley to remove her name as a sponsor. The other 13 said they'd have to study it. John Daley held the proposals in committee for weeks before finally granting them a hearing last week.

The hearing was a command performance for the many officials who paraded before the commissioners to offer the party line. Represent-atives from the Park District and school board said Mayor Daley had always been generous with TIF funds (even though these agencies lose far more tax revenues to TIFs than the schools and parks within TIF districts get back). Aldermen Walter Burnett, Helen Shiller, and Patrick O'Connor said that without TIFs their neighborhoods would suffer -- as if developers need more incentives to develop on the north side after 30 years of gentrification. A couple of suburban officials warned that Quigley's proposals would smother development in their towns. And John McCormick, the city's finance manager for TIFs, criticized the idea of posting TIF moneys on tax bills on the grounds that the information would "confuse" property tax payers.

Then it was the commissioners' turn to speak. Peter Silvestri, a Republican from Elmwood Park, said if Chicago voters don't like the way Daley is running the program they should vote him out of office. Commissioner Joseph Mario Moreno, who's backed by the 11th Ward Democratic organization, said the program looked good to him. John Daley said he didn't know if the county could afford to spend the money it would cost to put the TIFs on property tax bills. Larry Suffredin, the Democrat from Evanston who generally backs budget-cutting legislation, picked up on McCormick's argument, agreeing that too much information on their bills would confuse taxpayers. (Suffredin is a partner at Shefsky & Froelich, a law firm that according to city documents does bond work for the city on TIF deals.)And Deborah Sims, a south-side Democrat, offered a variation on the race-card argument successfully employed by Daley in his fight against the big-box living-wage ordinance. It was one thing, she said, for people up in Quigley's north-side district to be against TIFs, but her district really needs them (never mind that no one's calling for the abolition of TIFs in blighted areas). The commissioners rolled out just about every justification for killing the proposals except the one that mattered most -- Mayor Daley's opposition. "Suddenly the commissioners say they don't want input? Since when do county commissioners not want input?" said Quigley in disbelief. "The spin is unbelievable. 'Let's hide taxes from the taxpayers because we don't want to confuse them.' Orwell would love that one. If TIFs are great, don't hide them. Tell people what they're paying for. Look, I know they're getting pressure from City Hall. All of a sudden the mayor's dirty little secret is being exposed and no one wants the secret out."

By the end of the testimony it was clear Quigley's proposals were going down. He pulled his resolution, the commissioners voted to kill his notification ordinance, and he deferred his property-tax-bill ordinance to another meeting.

Just like that, the county board threw away a chance to have a say in how the city spends county property tax dollars. "I can understand why they would be reluctant to vote for this," says Quigley. "It's the mayor's favorite program and it's a complicated issue. You're pissing off the mayor on an issue no one seems to understand."

Quigley needs nine votes to pass his property-tax-bill ordinance. It looks as though he can count on Butler, Hanson, Roberto Maldonado, and probably Peraica. But after that it's up in the air.His usual allies -- Forrest Claypool and Peraica -- were notably absent from the debate. They showed up for the early portion of the meeting but were gone from the floor when the proposals came up for vote. Claypool's clearly in a bind -- this may be the hardest vote he's ever cast. He owes his career to Mayor Daley, who made him his chief of staff and named him president of the Park District. When Claypool ran for president against John Stroger in last spring's primary, Daley cleared the way for his top political operative, David Axelrod, to work for Claypool. But if Claypool doesn't vote for the measure he loses all credibility as a reformer. "I know they [the commissioners] don't want to have to vote against this," says Quigley. "How can you vote against truth in taxation?"

Peraica generally relishes confrontation, but in the middle of his race against Todd Stroger for county board president he doesn't need to upset the mayor and alienate Daley's supporters, even if it means looking the other way on a program that drives up taxes.

But he and Claypool will eventually have to take a position, because Quigley says he'll bring back the tax-statement ordinance at a future meeting. "My message to the mayor, 'This isn't stuffed goose and I'm not an alderman,'" says Quigley, referring to the mayor's attempt to bully the City Council into repealing its foie gras ban. "We'll be back."

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