Chicago Reader | The Works | The True TIF Tally: Cook County clerk David Orr reveals--nay, publicizes--that TIFs sucked up more than 500 million dollars in property taxes last year. By Ben Joravsky

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Cook County clerk David Orr

The True TIF Tally

Cook County clerk David Orr reveals—nay, publicizes—that TIFs sucked up more than $500 million in property taxes last year.

By Ben Joravsky

November 22, 2007

Every year around this time Cook County clerk David Orr puts out a report on tax increment financing districts. In the past it’s been a computer printout containing data from the hundreds of tax zones throughout the city and county, organized under baffling categories like “equalized valuation,” “frozen valuation,” and “agency distribution percent.” He’d make a couple hundred copies, staple them together, and leave them in a pile on a counter in the county building. There they’d sit, of interest to no one but a few lonely academics, community activists, and reporters. Whether it was Orr’s intention or not, the reports’ obscurity helped conceal a major factor contributing to the city’s growing financial crisis.

Things have changed. For this year’s report Orr had staffers working day and night on an impressive packet that details in plain terms just how much the city’s TIF districts gobbled up in 2006—down to the last nickel and dime. You can still puzzle your way through the mysteries of the “Tax Agency Distribution Summary” if you care to, but you don’t have to: Orr’s issued a fact sheet explaining exactly how much the program consumes and how it operates. He’s included a map showing the TIF districts blanketing the city and county, and he broke out the take, showing how much each district has accumulated since its creation. The bulk of the package is available on his Web site, cookctyclerk.com.

Mayor Daley probably won’t be very pleased with Orr’s new transparency. TIFs are his favorite program—they’re the only game in town if you’re an alderman who wants a major development project in your ward. Designed by state law to eliminate blight in low-income communities, they’ve become a virtual slush fund for the mayor, producing hundreds of millions of dollars that he essentially controls single-handedly. There are at least 150 TIFs in the city already, no doubt with more on the way.

As many readers know, when a TIF district is created it freezes the amount of property taxes the schools, parks, county, and other agencies can take from that area for 23 years, diverting any revenue from increased property values or new development into a fund overseen by the city. As costs rise while revenue remains fixed, the schools, parks, county, etc, have to raise their tax rates to compensate for the money going into the TIFs. From Daley’s standpoint, the beauty of the program is that other taxing bodies do the heavy lifting while he controls the cash. And because TIF funds aren’t included in the city’s annual budget or broken down on tax bills, he can act like they don’t exist. Last year Daley stated in his annual budget address that he was levying about $720 million in property taxes. In fact, as the new figures show, the city extracted more than $1.2 billion.

According to Orr’s report, TIFs swallowed more than $500 million in 2006. That’s up almost 30 percent from the roughly $387 million collected in 2005. And while the coffers expand—the 2007 take should easily exceed $600 million—the mayor’s new budget hits us with a property tax increase of $83.4 million next year.

Orr’s figures also show the extent to which the TIF program has strayed from its stated goal of spurring development in blighted communities. Since 1984 TIF districts located downtown, on the Gold Coast, and on the near east and west sides have collected more than $1.35 billion that would have otherwise gone to the schools and other strapped taxing bodies. The Central Loop TIF, the granddaddy of them all, has reaped $875 million alone. Meanwhile, as you might expect, TIF funds established in truly deserving neighborhoods are puny by comparison. Englewood’s two TIFs have gathered only about $20 million between them, though one of them dates back to 1989. Woodlawn’s TIF fund has collected under $10 million after six years; Pullman’s has less than $20,000 after seven.

The city defends the program by insisting that the funds are an essential development tool. Planning department spokesman Pete Scales said that last year TIF funds netted $8.3 billion in private investment. Which raises the question: how does he know? It’s impossible to tell how much development areas like the Loop, South Loop, River North, and the near west side would have generated without the incentive of a TIF. There sure are a lot of cranes around these blighted communities.

According to Orr’s report, TIFs are the fastest-growing program not only in the city but in the county, where TIFs sucked up $300 million last year. In 1986 the sole TIF at the time, the Central Loop, collected just under $2 million in property taxes. By 1995 TIFs were drawing almost $44 million in property taxes; in 2000 they pushed to $129 million, and in 2002 they cracked the $200 million barrier. All told, the city’s TIFs have raked in more than $2.5 billion over the years—$2,534,701,105.72, to be exact.

“The total amount Cook County taxpayers are paying in TIF revenue now exceeds $800 million,” Orr writes in his report. “If TIFs were their own separate taxing agency, they would collect the second largest amount of revenue in Cook County. The Chicago Public Schools rank first with $1.7 billion.”

What led Orr to break the news so boldly this time around? “I’m open to TIFs as a tool, but I believe there are significant abuses,” he says. “I believe we have reached a point in the process where the public needs much more information about how this program is operating.”

Over the last year Orr’s been under pressure to drag the program out of the shadows—and it’s not just me harping on the subject (chicagoreader.com/tifarchive/). Cook County commissioner Mike Quigley got into the act last summer, proposing that tax bills reveal how much money is going into a local TIF. In April he released a report skewering the program and calling for more zealous oversight; in June he traveled to Springfield to brief Governor Blagojevich, House Speaker Michael Madigan, and other state leaders on the subject. Earlier this month Crain’s Chicago Business weighed in with an editorial condemning the city’s abuse of the program. “If ever there were a place to let the market take its natural course, this is it,” it said. That was followed by a report from the Civic Federation, a downtown watchdog group, which urged reforms to the program—in particular, greater public access to information. Now Sun-Times columnist Mark Brown is on the trail.

A former alderman himself, Orr has watched with a mixture of familiarity and disbelief as aldermen put on a public show of breast-beating over the mayor’s property tax hike. Twenty-one of them went so far as to vote against it (though eight of them canceled that out by voting for the overall budget). Meanwhile a $500 million drain on the city’s property tax revenues went undebated and for the most part unremarked.

There’s no excuse for that now. The numbers are out in black and white for all to see.