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TIFs Thu Mar 26 2009
Should Chicagoans Stop Throwing Money into a Giant Hole?
A few weeks ago The Onion--America's finest (fake) news source--boldly asked the question: Should the government stop dumping money into a giant hole?
"It's just like they say," said commentator Duncan Birch, "you have to throw money in a hole and set it on fire to make money."
Of course, the piece was a parody of the dramatic increase in government spending in the form of bailouts, stimulus and whatnot, but there are real-life money holes here in Chicago.
TIFs
They're called TIFs -- tax increment financing districts -- and, considering they form a patchwork over 40 percent of Chicagoland, chances are you either live or work in one.
TIFs are supposed to facilitate economic development in blighted or dilapidated areas. However, as Chicago Reader reporter Ben Joravsky has consistently documented over the past four years, Chicago's TIFs have morphed into slush funds for Mayor Daley and city planners whose neighborhood designs aren't always met with open arms by residents.
The situation in Uptown -- a northeast Chicago neighborhood -- is a case in point. Originally promised mixed income housing, a movie theater, a big box store and street level retail, Uptown residents have watched as 4 of 5 developers have bailed on the project, and the only part moving forward will create 178 units of low income housing. With Wilson Yard's $52 million TIF stash, each unit will cost area taxpayers nearly $300,000.
Sounds pretty posh to me.
The plan for more low income housing is in a neighborhood where the Chicago Housing Authority's own rules prevent it from building more low income housing. Not that rules matter or anything.
Fix Wilson Yard
Enter Fix Wilson Yard, a grassroots movement of over 2000 Uptown residents shining light on broken promises and wasteful TIF fund spending. Last December, the group filed a lawsuit against the City of Chicago, alleging a misapplication of the Illinois Tax Increment Finance Act, which requires a TIF district to be designated "blighted"- Wilson Yard is not. The suit also alleges aldermen violated of the Open Meetings Act by amending the redevelopment plan without public input.
Fix Wilson Yard even has over 700 members on Facebook, where they share updates and organize meetings (the next meeting is on April 4th).
Aside from the lawsuit, Fix Wilson Yard has done quite a bit of research on the impact of the TIF on each household in the district. The group sent letters to each homeowner inside of the Wilson Yard TIF this week that highlight the percentage of property taxes being directed away from schools and toward the unpopular redevelopment plan:
For all the different tax amounts owed, there was one common piece of information in these letters: 68%. As in 68 cents on the dollar. That is the percentage of their 2007 property tax dollars that was diverted away from our schools, parks, police and other essential city services, and sent instead into the pockets of politically connected developers and into a closed door project spearheaded by an alderman who has no concern for the welfare of her constituents.
What does that mean for individual homeowners?
In more concrete terms, let's say you paid $4,000 in property taxes for 2007. That means over $2,700 of your tax bill never made it to its intended destination. When you aggregate everybody in the Wilson Yard TIF district, that number explodes to $5.8 million being siphoned away. And when you add up all of the TIF districts in Cook County, you arrive at the mind boggling figure of $892 million.
And that's just the amount collected by TIFs in 2007. No wonder the Chicago Public Schools has a nearly half billion revenue shortfall.
Getting TIFed Off
The Illinois Policy Institute-the think tank I work with-issued a policy briefing earlier this year on the unaccountable, opaque nature of TIFs. The report recommended a number of steps to improve TIF transparency, including:
All information about a TIF, including its name, any parties involved (such as developers or vendors), the amount of spending, who authorized the TIF creation, contracts, and the TIF's purpose should be posted on a local government's official website. A complete, detailed, clear, and user-friendly list should be easily accessible to the public so they can understand where their property tax dollars are going and who is involved in the project.
There are moves afoot to reform TIFs both in Chicago and through state law. Alderman Scott Waguespack introduced the TIF Sunshine Ordinance to the City Council on March 16. The ordinance would:
Require all TIF annual reports are posted on-line and include all the information requested by the Illinois Comptroller, including the initial EAV and current aggregate EAV of the TIF area
Provide all TIF Redevelopment Ordinances and Amendments on-line
Update additional TIF expenditures on a real-time basis between annual report publication.
The ordinance has been tabled since its introduction, and its sponsors anticipate it will pass next month.
That's good news for Chicago proper, but what about the rest of the state?
State Senator Mike Noland introduced SB1990 last month, which would permit citizen involvement in TIF development planning, and refund surplus TIF funds to the tax bodies that would have normally received the money. The bill is sitting in committee now and has no additional sponsors.
Want more money for schools, parks and police? Tired of throwing your property tax dollars into a giant hole?
Get TIFed off -- support TIF reform.
yo / March 26, 2009 8:16 PM
That $300,000 per unit in Wilson Yard is on the low end.
High end units will run $440,000.
How big of a hole is that?
Also, Shiller did a document dump of TIF documents on her site, today.
Not all of the documents, mind you - just the ones that don't detail the kinda stuff that she doesn't want anyone to see.
I'm not sure if that's opaque, or myopic.
Either way, it ain't transparent.