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Money for Nothing

How the city managed to spend $1.4 million to turn a commercial strip into empty lots.



In 2002 the city announced plans to buy up property on the 5200 block of West Lawrence in the Jefferson Park neighborhood. Officials said they would tear down the existing buildings, clear away the debris, and erect a residential and commercial complex that would supply new jobs and bring in new property taxes.

Seven years and $1.4 million later, they've accomplished the demolition part. The rest hasn't gone so well: the lots there produce far less in property taxes than they did before the city got involved—now that they're vacant—and the piles of rubble on them are an apt illustration of how far plans for the new development have progressed.

It's yet another textbook case of a tax increment financing deal gone bad—the city assured the public they could get something for next to nothing when instead they're getting next to nothing for a heap of their own money. It's the same sort of promise city and Olympic-bid officials are making with their plans to lure a developer into producing a $1 billion Olympic Village complex on the south side—supposedly without using any taxpayer money.

As with all TIFs, the one in Jefferson Park aims to eradicate blight and stimulate development by diverting property taxes into a fund largely controlled by Mayor Daley and the local alderman, in this case the 45th Ward's Patrick Levar. But from the time it was created in 1998, the Jefferson Park TIF was greeted with doubt and derision by opponents, who didn't trust the city to spend the money fairly or wisely.

By 2002, Levar and the city's planning department had settled on a plan to use eminent domain to acquire all the property on the 5200 block save several parcels owned by Demetrios "Jimmy" Kozonis, a well-connected developer who also owned the building that housed Levar's ward office.

The other property, including a bank, a tire store, and several apartment buildings, would be turned over to Kozonis so he could tear them down and build a seven- to ten-story residential and commercial complex. At a Community Development Commission meeting in 2004, city officials pledged that no public funds would be spent to buy up the land. Instead, Kozonis would, as one city official put it, "front fund" the money to buy out the other property owners on the block.

Things didn't quite unfold as promised. Kozonis and Levar didn't share the plans with ward residents until after the city had initiated eminent domain proceedings against property owners on the block. As soon as locals got wind of the project Kozonis wanted to build, they erupted, protesting that it was too tall and too dense for a community of bungalows. Facing a revolt, Levar withdrew his support.

This effectively killed the plan, and Kozonis didn't have any others in the works, so he concluded he had no obligation to come up with the acquisition money. "They didn't deliver what they were supposed to deliver," he told me recently.

But by this time the city had already agreed to buy out another of the property owners, meaning that taxpayers, through a TIF account, ended up providing $1.4 million to acquire land for a project that wasn't going forward. Meanwhile, Donald Zordani, the bike shop owner, so fiercely resisted the city's efforts to acquire his property that the city threw in the towel and let him keep it. As 2007 came to a close everything had been torn down except for the bike shop, and the block was generating less than half the money in property taxes than it had been a decade earlier. The project intended to eradicate blight and stimulate development had in fact eradicated development and stimulated blight.

Moreover the city was immersed in a logistical quagmire. To develop the block they'd have to build around the bike store, joining parcels on the eastern edge now owned by the city with Kozonis's parcels on the west. In addition, the Jefferson Park TIF account was significantly depleted, so the city had to take $853,000 from the neighboring Portage Park TIF to buy the land on Lawrence Avenue. Is that legal? Well, yes, but only because TIF law is riddled with loopholes. Regardless, it's not very prudent—TIFs are supposed to support themselves, and it's risky to spend money that's not in the account—nor very fair to people in Portage Park, whose TIF money was going to be squandered on bad real estate deals in another neighborhood.

More than two years passed without any new plans emerging for the block. Then a few weeks ago a city proposal to acquire four more parcels, including the bike store, showed up on the agenda for the February meeting of the Community Development Commission. Brian Nadig, publisher of the Northwest Side Press, a community newspaper, saw the agenda and called Zordani, the bike store owner, who said he had no intention of selling, and Levar, who said it was a mistake—the city only intended to buy out Kozonis.

Mistake or not, the article caught the attention of neighborhood activist Ron Ernst, a longtime critic of the Jefferson Park TIF, and several of his allies. So instead of breezing through a typically quiet meeting, the CDC commissioners faced a handful of angry Jefferson Park residents who felt the city was trying to sneak something past them.

Levar started off by assuring the CDC members the bike store had been included on the acquisition list in error. He said the city planned to build around the bike store and had in fact come close to several deals. It was time to look into acquiring the land from Kozonis and finding another interested developer. "This land has been empty for too long," said Levar. "We want something done by the 31st of December."

Denise Roman, a planner for the city's Department of Community Development, said city officials weren't going to force Kozonis to sell his property. In other words, no eminent domain this time. "This is voluntary acquisition," Roman said. "The owner of the four properties is not opposed." Meaning Kozonis was fine with selling—for the right price.

Kozonis was at the meeting but didn't testify. Ernst did. He said it was no surprise that Kozonis wasn't opposed to the proposal, since he was likely to make out just fine. "You're treating him differently than you treated all the other property owners on the block—you're not forcing him to sell," Ernst said. "Why would the city give up the right to eminent domain?" Ernst also demanded that Kozonis be required to cover the $1.4 million in so-called front funds that the city ended up spending on other property on the block.

Eventually the CDC deferred action on the proposal, citing too many unanswered questions, and soon after the city announced it was not going to buy Kozonis out—at least not yet. "At this point we have no plans to take this back to the CDC," said Molly Sullivan, a spokeswoman for the Department of Community Development. She said the city would continue to look for ways to "market" the land to other developers.

But one way or another the city will have to deal with Kozonis if the whole block is going to be developed, since he owns most of it. "I'm available to talk reasonably," Kozonis said. "I don't want to hold back. If another developer has other ideas and can work it out, it's OK."

There is of course a larger lesson here: when our elected officials promise they can engage in real estate speculation without putting any of our tax money on the line, it's probably too good to be true. The only thing you get for nothing is nothing. And when the city is involved, you often get less than that.v

Ben Joravsky discusses his weekly column with journalist Dave Glowacz at And for even more Joravsky, see our blog Clout City.

The project intended to eradicate blight and stimulate development had in fact eradicated development and stimulated blight.

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