TIFs Wed May 12 2010

Midwest TIF Gets a $32 Million Raise

This Op-Ed was contributed by Valerie F. Leonard, a community development consultant on the city's West Side.

The City Council approved an ordinance on April 14, 2010 to increase the redevelopment budget for the Midwest TIF district from $100,500,000 to $132,865,000. This represents a 32% increase from the district's original budget. The City of Chicago's Projected TIF Balances Report 2009-2011 indicates that the Midwest TIF is projected to have a cash deficit of -$6,842,003 at the end of 2010 if every project on the schedule is implememented, and projected 2010 incremental tax revenues of $13,000,000 materialize. The projected deficit is expected to grow to -$7,213,492 by the end of 2011.

While the total budget for the Midwest TIF was increased 32%, the line items that received the greatest percentage increases include Day Care (95%), Financing/Interest Subsidy (95%) and Relocation Expenses (56%). The Relocation Expenses line covers the City's costs for relocating businesses and residents displaced by the implementation of the TIF.

The $32 million raise for the Midwest TIF comes at a time when the City is grappling with ways to fund $25.4 billion in pension liabilities. As it stands, the City only has 43 cents in the bank for every dollar they could owe in retirement benefits for its employees. The Commission to Strengthen Chicago's Pension Funds released a report on April 30, 2010 indicating that the City would have to increase its current pension contribution by $710,000,000 per year and gain an average return of 8% per year over the next 50 years to bring the funded pension liability to 90%. Unfortunately, the City doesn't have 50 years and will probably raise property taxes to offset some of the shortfall. This will come on the heels of a record property tax increase in 2009--with communities like North Lawndale and West Garfield Park bearing the brunt. The City closed a $550 million deficit and avoided property tax increases for 2010 with service cuts, layoffs, furloughs and proceeds from the sale of parking meters.

The new Midwest TIF budget provides a 40% increase in the Job Training, Training and Welfare to Work line, from $5,000,000 to $7,000,000. It should be noted that Midwest TIF reports indicate that funds from the Midwest TIF have been allocated for job training over the years. However, the City has not produced any evidence that North Lawndale residents have been hired or received any job training as a result of the TIF program.

A number of TIF-funded projects in the Midwest TIF have or will receive HUD funding. HUD Section 3 requires developers receiving HUD funding to make their best efforts to hire low income residents within the impacted communities. Unfortunately, the City's TIF reports don't track the number of low income residents hired through TIF funds that are leveraged with HUD funds.

If ever there was a time for the City to use TIF funds for job training for North Lawndale residents, the time is now. North Lawndale's unemployment rate was 11% in 2000 (US Census Bureau), while the unemployment rate for the country was 4.5% (US Dept. of Labor). The national unemployment rate was 10.2% on March 31, 2010 (US Dept. of Labor). If the relationship between the national unemployment rate and North Lawndale's employment rate is the same as it was in 2000, I would estimate that our unemployment rate is approaching 30%. Struggling schools, high dropout rates and a slow economy indicate that the unemployment picture will only get worse for our community if we don't take action.

The Midwest TIF redevelopment budget does not include any funds for local business improvements from the Small Business Improvement Fund (SBIF), or funds for residents to improve their properties through the Neighborhood Improvement Fund (NIF). However, the City makes routine deductions from the TIF for these expenses. In 2006, the City used $750,000 from the Midwest TIF for the $2,250,000 Midwest SBIF program and $2,250,000 for the $6,750,000 Midwest NIF program. Taking into account the SBIF and NIF programs, the true expenditures for the Midwest TIF budget are significantly higher than the costs outlined in the $132,865,000 budget. In order to find the true costs, one would need to review the annual TIF financial reports for every year going back to 2000, when the TIF was created. These are but a few examples of your public dollars at work. I encourage you to visit the City's website to review the TIF reports and redevelopment plans for further information.