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TIFs Tue Sep 06 2011

A Look Behind: Mayor Emanuel's TIF Commission; What They "Do and Don't"

Last Monday, Mayor Rahm Emanuel made good on his campaign pledge to reform the Chicago's sprawling Tax Increment Financing (TIF) program. So it would seem from scanning the headlines. Or maybe it's time to double-down on cynicism, because nothing has changed.

Hard to say, really, since there's been precious little analysis of what Emanuel's TIF reform panel actually proposed.

(For a quick refresh of how TIFs work, click here and here.)

So let's take a look. At bottom, their report urges the city to adopt four simple, technocractic habits:

1. Planning: TIF districts and projects should be governed by city-wide economic development and infrastructure plans, to be crafted by the Mayor's Office. New districts need a compelling reason for being; projects in those districts - whether private or public - must yield a solid return on investment.

2. Tracking: the city should measure whether districts and projects are actually having an impact.

3. Tweaking: with this performance data in hand, districts should be reviewed every 5 years. Private redevelopment projects should be monitored and held to account if they don't deliver on their job creation promises. (To date, the city has done a poor job of following up.) The city's TIF staff should be beefed up to get this done.

4. Transparency: all of the above - the plans, the numbers, the nudges - should be made public.

Call it smart TIFs. In essence, you invest in projects that actually further the revitalization of an area, see whether they're working, and adjust accordingly. Rinse, repeat.

Radical policy change this is not. Lots of folks were itching for an end to downtown TIFs and a renewed focus on the city's poorest neighborhoods. Others agitated for more TIF dollars to flow to the schools, or to affordable housing.

In fact, the report barely acknowledges the fact that rich downtown TIFs have raised and spent most of the money despite the fact that, according to state law, TIFs are designed to revitalize blighted areas.

Short of killing the TIF program outright, though, it's not clear that a thorough overhaul was even possible. (No doubt, more than a few critics would have loved to see TIF go.)

That's because TIF ain't ready for reform: 28 years and billions of taxpayer dollars later, nobody knows what the impact has been.

The smoking gun: all of the metrics the panel proposed to measure TIF performance - property value growth in every district, number of jobs created by projects, amount of private investment in a district, and so on - are already being collected by the city or the county. Many of these figures are listed in the contracts the city assembles before subsidizing private developments. It's just that apparently nobody in the Daley administration bothered to compile these figures. Never mind using them to, you know, actually keep tabs on the exploding program.

There are currently 163 TIF districts in the city of Chicago. If you have no idea which ones are working, how do you begin to overhaul them?

Instead, the report installs the machinery for gradual reform. It's change by a thousand tweaks.

From here out, everything hinges on execution. Will underperforming or innapropriate districts actually be shut down? Will the new plan shoot down bad projects, or will the Mayor just find a way to fund whatever he wants? Can TIFs move from slush to strategy?

Here's what we can say so far.

Planning is good. It's alarming that the third major American city muddled through the last twenty years with no overarching economic strategy.

We'll have to wait and see whether the plan is also good, because the reform panel made no attempt to sketch it out. The Mayor's wonks will in the blanks in the coming months; expect to see a lot of what was in the transition report.

If the result is smart infrastructure investments and redevelopment projects that anchor the revitalization of struggling areas, then that's progress.

Despite what certain cynics would have you believe, metrics are also good. They are utterly standard in the private sector, and for good reason. Yes, you can juke the stats, and yes, numbers have limits, but there's really no other way to evaluate big operations. You can't manage what you don't measure, goes the old saw.

On that count, the new TIF metrics are pretty foundational. The city could go further, but they're a good starting point.

It's telling that TIF districts spread throughout the city under Daley with little sustained planning or day-to-day oversight. Grow a pot of money, and people will want to spend it. No surprise TIFs turned into a slush fund.

At bottom, then, nothing's been settled. Over time, smart TIFs could lead to good projects, or maintain the slushy status quo. TIFs in thriving neighborhoods could be terminated, or the Cubs could get a handout.

How you see this panning out largely reflects how you already feel about Emanuel. Only time will tell. But at least, we'll be able to tell: by letting the sunshine in, the new mayor has just put TIFs in the news for years to come. (Savour that prospect.)

This piece was submitted by a reader.

 
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