The Shadow Budget: Who Wins in Daley's TIF Game | Politics | Chicago Reader

The Shadow Budget: Who Wins in Daley's TIF Game 

The economic development funds are supposed to go to neighborhoods that need it. Guess where they're really going. For the first time ever: how the city spends TIF funds, ward by ward

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The more valuable the property in the district, the more TIF dollars are generated. This wouldn't be a problem if TIF districts were created only in communities that pass what's become known as the "but for" test—"but for" the TIF, they'd receive insufficient investment to improve.

However, the definition of blighted is remarkably broad in the state law governing TIFs. In addition to areas with dilapidated or unused properties, those where "structures have become ill-suited for the original use" or need new "doors, windows, porches, gutters and downspouts, [or] fascia" also qualify. In Chicago, officials have decided the term applies to bustling portions of the Loop, the near west and south sides, Wicker Park, and even Lincoln Park. The property values in these wealthy and gentrifying neighborhoods climb, producing more tax revenues, which produce more TIF dollars, which produce more investment, which produces more development in these wealthy and gentrifying neighborhoods.

By contrast, if a poor community doesn't grow—if it stays poor—it doesn't matter how many TIF districts it has because they won't be gathering much in new property tax dollars. And any extra tax revenue that might've been collected and spread around the city from, say, the Loop stays in the Loop.

So as long as Mayor Daley continues to rely on TIFs as the city's main economic development program, rich neighborhoods will get more investment and poor neighborhoods will get less.

click to enlarge TIF funds paid for things like a new traffic signal on the near west side, improvements to Hillary Rodham Clinton Park on the near south side, and the demolition of a Greektown homeless shelter that was replaced with an upscale condo building
  • TIF funds paid for things like a new traffic signal on the near west side, improvements to Hillary Rodham Clinton Park on the near south side, and the demolition of a Greektown homeless shelter that was replaced with an upscale condo building.
  • Sam Adams

Some of the program's supporters say that over time the whole city benefits from TIF-funded investments, even if they're concentrated downtown. "I do consider myself an advocate of the TIF program, but I've also said no to many dozens of TIF requests," says Brendan Reilly, alderman of the 42nd Ward since 2007. His ward includes a good chunk of the Loop and the Gold Coast—not exactly underdeveloped areas, though portions of five TIF districts run through them. About $28 million in TIF money was spent there from 2004 to 2008.

"There is a much larger portion of the funds going downtown, but if you look at how they've been used in the last few years, the benefits extend to the whole city of Chicago," Reilly says. He points to the Riverwalk, a promenade along a portion of the Chicago River that was built with TIF money—at least $6.7 million in 2008 and 2009, according to city records, with the total cost anticipated to run as high as $60 million. "Certainly that benefits the residents of my ward, but it also benefits everyone in the city. It draws more tourists who generate more tax revenues for city coffers. I try to make sure we use the downtown TIF money for the greater public good."

That may be, but critics have questioned whether that's the best use of precious taxpayer funds. One skeptic was former alderman Isaac Carothers, who represented the struggling 29th Ward on the west side until he pleaded guilty to bribery in January. "We just passed a budget here when we were talking about the city being short of money, and here, $50 million, $60 million coming from we don't know where, from the sky," Carothers griped at a City Council committee meeting in 2008. "What about the projects in our wards?"

Moreover, as popular as the Riverwalk may be, it's hard to argue that it's spurring economic development in a blighted area. And unlike projects funded through the city's regular budget, none of it was subject to public scrutiny: the council didn't have to approve the expenditure.

For more than two decades the details of the TIF program have been kept under wraps. Unlike expenditures from the regular city budget, which have been revealed in an online procurement database and in annual budget reports and audits, details about how and where TIF money was spent were never revealed. Once a year city officials did release confusing reports about how much each of the scores of TIF districts (there are now about 160) received. But they never made any attempt to put together for public consumption a comprehensive accounting of the funds.

Then last fall several aldermen alerted the Reader to the existence of a single budget showing how the city planned to spend TIF dollars collected from 2009 through 2011—and which areas were the big winners and losers in the program Mayor Daley has called the only economic development game in town. After we badgered city officials for weeks, submitting a Freedom of Information Act request—and then appealing their denial of that request—they released a copy of the budget. Our analysis showed that downtown was slated to get far more investment than the city's neighborhoods.

We followed up with another FOIA request for a database of how money was actually spent for every TIF district and ward from 2004 to 2008. After a few weeks the city complied.

click to enlarge TIF districts on the south and west sides remain littered with boarded-up homes, empty lots, and abandoned cars.
  • TIF districts on the south and west sides remain littered with boarded-up homes, empty lots, and abandoned cars.
  • Sam Adams

The records handed over by the city show the program has yielded all sorts of concrete infrastructure upgrades and amenities in the Loop and surrounding neighborhoods: A new park, named for Hillary Rodham Clinton, in the middle of the Prairie Avenue Historic District. Ornamental streetlights on Madison west of Halsted. A new traffic light at Washington and Aberdeen, right next to Oprah Winfrey's Harpo Studios.

Other expenditures don't have such tangible results. MillerCoors recently affixed its logo to the riverfront side of the building at 250 S. Wacker that, thanks to $6 million in TIF subsidies (and another $18 million in state tax breaks), houses the beer giant's corporate headquarters. In return, MillerCoors has committed to employing 325 people here, though they're mostly transfers from Denver or Milwaukee. (And the city hasn't closely monitored previous job-subsidy agreements.)

The Daley administration has also repeatedly used TIF funds to move poor people out of gentrifying areas. For example, at Monroe and Green there's a glittering condo building with a sign in front advertising "unobstructed views." Up until 2006 a homeless shelter stood there. More than $2.5 million in TIF money was used to demolish the shelter, run by the Chicago Christian Industrial League, and move the agency to an impoverished area on the west side: the new facility is at Roosevelt and California, across the street from a grammar school.

In the South Loop the city used more than $2 million in TIF funds to get rid of an SRO hotel. In 2006, after fighting in court for seven years with the owner of the New Ritz, at 1007 S. State, the city acquired the building and told residents they had to find another place to live. About 100 of them were paid $475 apiece in TIF funds to help with relocation. The city then demolished the building. Over the last decade real estate in the South Loop has been hot, and the city initially floated the idea of allowing a new condo development on the site, but so far it's still a vacant lot.

Not all TIF funds were spent downtown. About $400,000 went toward acquiring property, tearing down old buildings, relocating merchants, and covering administrative costs for the ongoing redevelopment of the Englewood shopping mall at 63rd and Halsted. Once one of the city's busiest commercial strips, the mall had lost most of its merchants by the 1990s, and the city decided to rebuild it around a new $250 million campus of Kennedy-King College.

The campus opened in 2007, but the mall has yet to regain its old luster: Kennedy-King is surrounded by an expanse of empty lots, beauty supply stores, and fast-food joints. And when the college was moved it left behind another set of vacant buildings, Built in 1972, the old structures, at 69th and Wentworth, are being demolished at a cost to taxpayers of $6 million.

Mayor Daley likes to brag that his administration has upgraded infrastructure in neighborhoods across the city—laying new sewer lines, fixing sidewalks, building libraries and police stations. He and his aides have also spread around regular city funds—and kept aldermen happy—with what's called the menu program. Each alderman gets the same amount out of the public city budget, currently about $1.3 million a year, to spend on nuts and bolts chosen off a "menu" from the city's transportation department. Aldermen love the program because they can take credit for infrastructure improvements when they're up for reelection; among the most popular are new street lamps, street and sidewalk repaving, and speed bumps. When the administration is slow in responding to their menu requests—as it has been during the last couple years—aldermen get indignant.

But TIF money is a different story. It's not designed to be distributed equitably. Foulkes says she's had to figure out not just the mechanics of the program but the politics of getting what she wants from city officials. "We have discussed that—where is the money?" she says. "Being a new alderman is about holding your cards close to your chest, taking baby steps, making sure they're not taking things away from you."

She says she's optimistic her ward, the 15th, will have more money to work with since the City Council just approved a new TIF district centered at 63rd and Ashland. "We will be getting our share," she says. "There's no doubt."

Unfortunately, there is. The 15th Ward will never get an equal share as long as wealthier communities—like the Loop —are allowed to have TIF districts.

Same goes for the Ninth Ward, on the far south side. It includes portions of five different TIF districts that have been around for years, but they still don't generate much money because the neighborhoods around them are hurting. Last year Alderman Beale and city officials joined two of the districts together, expanding the size of the area where new property tax revenue will be captured by the TIF program. "We need more time," Beale says. "We're getting what we deserve but it takes a while."

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