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Public Funds, Private Windfall

The deal's all but sealed: tax revenues meant for the public good will fund a face-lift for tax-exempt Loyola.



City officials came to Rogers Park last week to give another pitch for the Devon-Sheridan tax increment financing district, boasting of the tax revenue, job opportunities, and development it will generate.

But residents left last Tuesday's meeting unconvinced. No matter how you spin it--and the city's been spinning it every which way for the last several months--the Devon-Sheridan TIF is not going to do what it was intended to. Unless, that is, it was intended to take up to $46 million in property taxes away from public services and hand it over to a private institution--Loyola University.

"The city's taking from the poor and giving to the rich, and bending the law to do it," says Bronwyn Elkuss, a Rogers Park resident leading the charge against the TIF. "It's disgusting."

To understand how a TIF works you have to understand the basics of our property tax system. Property tax revenues are distributed among 11 bodies, among them the Board of Education, the Park District, and the city, which includes the police and fire departments as well as Streets and San and the sewer department. A TIF freezes the amount of money these bodies receive in property taxes--which is not at all to say that property taxes themselves are frozen. They rise with new assessments and rate hikes, and when they do the extra amount generated--what's known as the increment--goes into the TIF fund. So, for example, if you're paying $100 in property taxes when a TIF is created, that's all the schools, the parks, the cops, the firefighters, the garbage collectors, and the sewage treaters will get even as your taxes rise to, say, $150. The extra $50 goes to the TIF.

And what does the city do with this money? Pretty much anything Mayor Daley and the local aldermen want. State law requires that TIFs be used to replenish the tax base and regenerate blighted neighborhoods. But the regulations are complicated, and there's virtually no independent oversight to keep the city from bending or ignoring them. Meanwhile TIFs continue to flourish: there are now 131 in town, consuming about $329 million a year in property taxes.

Created in 2004, the Devon-Sheridan TIF runs in two long stretches, from Clark Street to Broadway along Devon and from Devon to Farwell along Sheridan, encompassing 260 parcels of land and 70 acres of prime north-side property, including Loyola's lakefront campus. Over time the city expects to divert an increment of at least $68 million in property taxes to feed the TIF, which will keep absorbing funds until 2027.

As with all TIFs, Devon-Sheridan couldn't have been created without a consultant's report explaining why it was needed, what it was intended to pay for, and how it would benefit the community. According to the report, published in October 2003 by real estate and development advisers S.B. Friedman & Company, the Devon-Sheridan TIF would enable Rogers Park to fix up deteriorating buildings, replace inadequate utility lines, and spur growth in its tax base. "The language is vague, but the objectives seem noble," Elkuss says.

Trouble is, the TIF's first big project won't accomplish any of these goals. Instead, the city plans to give Loyola up to $46 million so the university can renovate four buildings on its lakefront campus: Mundelein Center, Coffey Hall, Piper Hall, and Flanner Hall. None of these four buildings was listed in the report's survey of deteriorated properties within the TIF district. In fact, the report didn't rate any of the buildings on the Loyola campus deteriorated, nor did it specify that TIF money should be used to renovate any of the university's holdings.

All four targeted buildings are tax exempt. And what's more the TIF is earmarked to give Loyola about $2.125 million for the Root Photographers building, at 1131 W. Sheridan, which the school is converting into another tax-exempt university facility. In other words, the city wants to spend property tax dollars to turn tax-creating property into tax-exempt property.

"They're taking money from the schools, the parks, the police, the fire department, and everything else that we need and spending it to deprive us of public dollars," Elkuss says. "It's crazy."

The TIF runs through the 49th and 40th wards. Aldermen Joe Moore and Patrick O'Connor say they support the project because Loyola's been such a good neighbor. The locals, they say, should be grateful such an outstanding institution wants to remain there.

Maybe so, but Loyola itself hasn't made the case that it needs a handout. There's no threat that without TIF assistance the school will go out of business or be forced to sell its valuable lakefront land for development. Loyola's enrollment is rising. It charges more than $20,000 a year in tuition, and its board includes people from some of the country's largest and wealthiest corporations--not to mention Mayor Daley's brother William and Illinois house speaker Michael Madigan's wife, Shirley. It obviously doesn't lack for clout.

"OK, Loyola wants to improve its property--great," says Elkuss. "But everyone wants to improve their property. If I want to fix my roof I have to go out and get a loan. Well, Loyola should go out and get a loan. They should do a big fund-raiser with their influential board members. The city can't afford to pay for Loyola's projects."

As Elkuss points out, there are pressing needs for tax dollars in Rogers Park. "I live across the street from Sullivan and Kilmer schools, and they're both suffering," says Elkuss. "Yet we're taking money intended for public schools and giving it to a private university. It's immoral."

She also thinks it's illegal, and she and her allies have been looking for a lawyer to file suit. So far, however, they've been unable to afford one, and no one's stepped forward to take the case for free.

In the meantime the project is edging toward final approval. In September the city's Community Development Commission authorized the planning department to work out the fine points of a deal with Loyola as developer. Eventually that agreement will go before the City Council, which is expected to approve it, as it generally rubber-stamps all TIF deals.

At last Tuesday's public meeting Moore and several planning department representatives joined Loyola University officials to cheer on the project (Alderman O'Connor was a no-show, but he did send an aide). The boosters went on about all the projects the TIF might fund in the future, ducking and dodging the sharper questions about how its money is being spent right now.

"Why is the city taking money from general purposes and putting it into a special little honey pot for the city to give to its favorite developers?" asked Frank Williams, a local resident. "If Loyola wants to develop Mundelein Center, God bless 'em. But why does that money have to come from the public tax fund?"

The officials said nothing for an awkward second or two. Then the moderator called on another questioner from the back of the room.

Art accompanying story in printed newspaper (not available in this archive): illustration/Archer Prewitt.

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