Cook County Clerk David Orr's annual TIF report is due out tomorrow, and the news is all bleak.
On the one hand, the city's tax increment financing districts are taking too much in property tax dollars. On the other hand, they're not taking enough.
In calendar year 2007 -- remember, TIF accounting is always one year behind -- Chicagoans paid $555,310,568 in property taxes into the city's 155 TIF districts.
That's $555 million in property taxes that might otherwise have directly gone to schools, parks, police, and so on and so forth. Instead it was funneled into TIF accounts that are essentially slush funds controlled by Mayor Daley. Because there are so few oversight bodies and the program is largely unregulated, the mayor is free to spend that money virtually anyway he likes. I suspect he's holding on to as much of it as he can in order to pay for the 2016 Olympics, should the International Olympic Committee award us the games.
According to Orr's report, the big TIF winners are the usual downtown districts: Central Loop ($111 million), Near South ($46.1 million), Canal-Congress ($19.2 million), LaSalle Central (18.9 million), Kinzie ($16.3 million), and Near North ($14.9 million).
It's reverse Robin Hood -- a program intended to spark development in blighted, low-income communities winds up showering goodies on some of the city's wealthiest neighborhoods.
"There has to be more transparency in the TIF program," says Orr. "There has to be more ability for the public to understand how the money is spent in individual TIF districts. Look, I supported a TIF district years ago when I was alderman [of the 49th ward]. But that was a poor area that couldn't get private capital. TIFs are everywhere now, including high-class areas in Chicago. There has to be more accountability."
Once again Orr noted the irony of aldermen bellowing over cuts in the mayor's budget while looking the other way and having no comment about ongoing hikes in what amounts to the TIF property tax. "The mayor is trying to make up a giant hole in the budget -- he wants to boot everything that walks," says Orr. "And the city is officially collecting from Chicago property taxpayers $555 million. Has the public had any real say in how it gets spent? Do they think it's spent wisely? These are important questions."
For all the property taxes the TIFs have collected, however, the painful irony is that they may not have collected enough. The 2007 total is up by 11 percent over the $500 million TIFs collected in 2006, according to Orr's report. But last year's hike was up 30 percent over 2005 -- thus the rate of increase has been cut by more than half.
That's because the TIF take is largely based on property values, which have recently been falling. If property values continue to fall in the TIF districts, the TIFs will collect even less money in the coming years. That's not necessarily bad -- personally, I wish the program would be shut down altogether until it's more efficiently and honestly run. But I suspect the city has overextended itself with the TIFs.
The real story buried in Orr's numbers is how the slowing hike in TIF dollars speaks to future financial troubles for the city. Chicago's borrowed hundreds of millions of dollars -- particularly to build new schools -- against future TIF proceeds. If TIF revenues continue to fall, they won't keep pace with the city's rising debt obligations.
Then what? Tax hikes, job cuts, service cuts, fee hikes -- in other words, more of the same. The notion that TIFs were some sort of magical free-money zones was never more than city propaganda. Unfortunately, the city has fallen for it's own myths. In the coming years, we're going to pay a big price for our gullibility.