Dear Mayor Daley: Thank You For Making Our Point About TIFs | Bleader

Monday, November 2, 2009

Dear Mayor Daley: Thank You For Making Our Point About TIFs

Posted By on 11.02.09 at 01:21 PM

"To be perfectly frank, I think it’s just a lack of marketing about what [TIFs] do and account for," Daley said. "We just have to show, with better marketing, we have to show what the benefits to the community are."

The mayor said that the special taxing districts, which freeze the amount of property taxes collected within a given geographic area for up to 23 years and set them aside for local improvements, have allowed the city to build new police stations, fire stations and libraries.

THAT'S NOT WHAT TIFS ARE FOR. THAT'S SORT OF THE PROBLEM.

Take it away, Ben and Mick:

Not all the TIF expenditures are corporate subsidies. Among the TIF-funded projects listed in the documents for the next couple years: new schools, sidewalk and alley repaving, streetlights, park improvements, even job training programs. Burnett, the 27th Ward alderman, says he wants to train unemployed people to make ward improvements that were once made by city workers paid for out of the official budget. "I want to get people to do some clean-up work in my area because Streets and San is being shortened every day," he said.

Aldermen with money-generating TIFs tend to be big supporters of this way of paying for city services. But it almost guarantees that some communities don't get their fair share.

By law the money can only be spent in the district that produced it or in an adjacent TIF district. This means that some wards and neighborhoods end up with far more TIF money to spend than others. For example, in 2007, the most recent year for which numbers are available, the Roseland/Michigan TIF, which runs along a depressed stretch of South Michigan from about 101st to 120th, brought in about $707,000, according to Cook County clerk David Orr. In contrast, the LaSalle Central TIF, which includes much of the city's financial district, brought in about $19 million.

This is not lost on the aldermen. In fact, one alderman who has several flourishing TIF districts in his ward asked us not to detail the specific expenditures in them: "I don't want my colleagues to be jealous," he said.

"Over the years [administration officials] have been a little secretive about them, and they've played aldermen against one another when they rape these TIFs," said Ninth Ward alderman Anthony Beale. His ward includes three TIFs, and Beale thinks they're integral to his redevelopment plans. But he argues that he's one of the aldermen who's been played in the past and is now due some infrastructure money: "Some wards have gotten new police stations, firehouses, and schools—and I haven't gotten any." But he declined to make his portion of the TIF budget public.

By moving more necessary expenditures into the secret budget that he ultimately controls, the mayor also wields even more power over every public entity, from the City Council to the public schools to the Park District. At various times at least half a dozen aldermen have told us that mayoral aides pressure them on key votes—such as the ordinances for funding the Olympics or moving the Children's Museum to Grant Park—by either promising to give their wards more TIF dollars or threatening to take TIF dollars away.

Some aldermen say many of their colleagues don't grasp how the program works and simply agree to everything proposed by the administration. Others say they've had to figure out how to get what they need out of the program. Burnett says he learned his lesson about eight years ago, when the city used TIF money to put up ornamental lights along Chicago and Madison without consulting him first. "I'd just told other parts of my community we didn't have money for lights, then I saw the new lights and said, 'Where did that money come from?'"

Burnett says he raised a stink, and now things are different: "I think I'm fully part of the process—if I pay attention."

Aldermen also say they've become dependent on the program—and thus the mayor's admin­istration—to make up for shortfalls from other sources. "For me and my community, it's a great thing," says Burnett. "But since I have TIFs we're not getting anything from the other agencies. We just got a new el stop at Morgan and Lake. It was all TIF money—there was nothing from the CTA. When we go to the parks and ask for something, they say, 'Use your TIF money.' Same with the Board of Ed. So it's a plus and a minus."

Here's what I wrote awhile back, and I will continue to repeat it until I am taken away to be committed and replaced with someone much less irritable.

And reading through some of Joravsky's old TIF coverage, I rediscovered this little gem, from the city-issued "ABCs of TIFs":

"TIF is not a new tax, but it works by putting the natural increase in property taxes to work in that specific neighborhood."

"Natural" != "extra," to my mind.

Hang on, I'm not done. Note that specific neighborhood. Here's how that works:

"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."

Okay, bear with me:

If TIFs work as intended, the "extra" tax revenue is driven back into that specific neighborhood. Therefore neighborhoods that will "naturally" generate more tax revenue (and the natural increase can be related to TIF-funded development, but also Alan Greenspan, AIG, and the price of tea in China) will siphon off more money from the city tax base than the more blighted neighborhoods that the program is theoretically intended for. Thus, in some ways, the system works in reverse - the money pools in districts with more and/or more valuable properties.

Since this draws away from tax revenue that would go to citywide services, taxes then have to go up to make the tax base more level. As Joravsky puts it:

"Think about this. If the schools, parks, and county can only get $100 from a TIF district, what do they do when their expenses go up to $200? They have to raise their levies—the amounts they each get from the property tax pie—to compensate for the money diverted to the TIFs. When they do that, property taxes go up. No matter what the city tells you, TIFs are tax hikes, plain and simple—the more you create, the higher taxes go."

It's a win-win for the mayor: a way of passing off tax hikes - and not just regular tax hikes but ones that create malleable slush funds - as "extra" tax revenue, as if TIFs were a way of spinning straw into gold: "everyone—including people who don't live in the TIF district—pays more. This is how TIFs result in tax hikes across Chicago, even though almost every elected official follows Mayor Daley's lead in pretending they don't."

Win-win, at least, as long as it's framed that way.

Two things are at work here: the use of TIFs for what we think of as basic city services, and the use of TIFs in non-blighted areas. Because the TIF budget amounts to a non-transparent and logistically limited secondary city budget, it actually makes addressing the needs of constituents harder, not easier - which, as "The Shadow Budget" makes a compelling argument, benefits the mayor because it gives City Hall more control over city council (a very important part of the piece is the portrait it paints of aldermen having to hustle behind the scenes for TIF money), while removing control from citizens (because the TIF budget is less than transparent).

TIFs don't "allow" the city to build schools and fire stations - tax increment financing is a different means of funding construction, construction which the city obviously has done since time immemorial, and it's arguably worse.

On the other hand, TIFs do allow the city to get more money from the state for the CPS, as Ben Joravsky pointed out in 2006.

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