A couple weeks back Sun-Times reporters Tim Novak and Chris Fusco detailed in a two-part series how many of the "affordable" housing units in the University Village development near UIC were actually sold to connected and well-off people who turned them over for a quick, handsome profit. The stories noted that the development, built on the grave of the historic Maxwell Street community, was raised with the help of millions of dollars in taxpayer subsidies pulled out of tax increment financing accounts.
After reading Novak and Fusco's stories, I called up my friends who live in the area and asked if they knew they lived in a TIF district.
No, they told me.
Just as I guessed. And that's how the city has been able to so routinely abuse the TIF program: most Chicagoans don't even know it exists, much less how it works.
Novak and Fusco wrote: "University Village homeowners pay next to nothing for city services like police protection and public schools. That's because they live in a city of Chicago 'tax increment financing district.'"
Well, yes and no. The folks in University Village pay property taxes—it's just that what they pay gets diverted from the schools, parks, city, and county and sent to the Roosevelt/Union TIF district account.
Here's how it works. Until 2022, when it expires, the Roosevelt/Union TIF will collect about 95 percent of property tax dollars paid by landowners within its boundaries (roughly Roosevelt on the north, Morgan on the west, Union on the east, and 15th on the south).
For example, my friend Bob, who lives in the district, paid $9,177.95 in property taxes last year. His bill itemized who supposedly got what out of that $9,177.95: the Chicago Public Schools, $4,997.18; the Chicago Park District, $651.97; the city of Chicago, $1,942.38; and so on. The bill also informed him that zero went to the Roosevelt/Union TIF.
In actuality, 95 percent of his taxes—or about $8,719—went to the TIF. So the schools only got $250, the parks $33, and the city $97.
In other words, his tax bill was—to put it mildly—inaccurate, despite being painstakingly itemized down to the penny.
Meanwhile, to compensate for the property tax dollars they aren't getting from Bob, the schools, parks, city, county, et al, have to raise everyone else's taxes. Admittedly, his $9,177.95 doesn't amount to much for anyone else because it's spread over thousands and thousands of taxpayers in the city. But Bob isn't the only guy in the TIF district, and the Roosevelt/Union TIF isn't the only TIF district in town. There are more than 160 of these fund suckers, and the City Council—at Mayor Daley's urging—regularly creates new ones. From 2005 through 2007 the TIFs siphoned off more than $1.4 billion in property taxes—which, just to give you a little perspective, is more money than we got for leasing out our parking meters for the next 75 years.
In 2006 then Cook County commissioner Michael Quigley proposed an ordinance that would have forced the county to detail the TIFs' take on property tax bills. Mayor Daley sent several flunkies, including a few aldermen, to persuade Quigley's colleagues that taxpayers would just be confused by the truth about where their money was going. His brother, commissioner John Daley, who was chairing the meeting, ended up burying the proposal in committee. Quigley has since moved on to Congress, where I'm sure he'll find it easier to pass a national health plan than to get Mayor Daley to tell the truth about the TIFs.
To be clear, the fundamental issue here isn't the inaccuracy of our tax bills. It's how much unregulated power we've granted to one man. If you think we're all better off simply handing our mayor hundreds of millions—and soon to be billions—of dollars, then the system is working great for you.
In the case at hand, Daley—with the council's rubber-stamp approval—provided up to $75 million in TIF funds to obliterate the old Maxwell Street neighborhood, a grungy, low-rent community, and build University Village, a pleasant mix of dorms, town houses, condos, and retail. Depending on your perspective, this was either the eradication of an eyesore or desecration of a landmark.
But we'll never really know whether the University of Illinois truly needed all that money—in other words, whether the project wouldn't have gotten off the ground without it, which is supposed to be the standard for the use of TIF funds. But the city rarely, if ever, asks developers for a public explanation of why the project hinges on subsidization by taxpayers.
We also don't know exactly how UIC has spent the $10.2 in TIF money the city's given it so far. There's often no effective oversight after a TIF deal has been approved.
The city's original agreement with UIC lists several approved areas for funding, including water and sewer infrastructure and property acquisition. I called Mark Rosati, UIC's associate chancellor for public affairs, to ask how the funds were spent. He e-mailed me back with the following statement: "The funds have been used to reimburse the university for authorized expenditures on infrastructure such as rebuilding streets, public utilities (sewers, water) and sidewalks."
Sounds good so far. I called to ask for some specifics. Rosati didn't return the calls.
The city's 2006 annual report for the Roosevelt/Union TIF says the University of Illinois board of trustees received $4,131,309 in TIF funds that year for unspecified "acquisition" costs. The 2007 annual report says the board got $3,086,328 that year for unspecified "development" costs.
And what exactly were they? Who knows? Maybe the money was used as wallpaper. I'm sure Rosati will get back to me any minute now, and when he does I'll be sure to ask.
Ben Joravsky discusses his weekly column with journalist Dave Glowacz at mrradio.org/theworks.