Correcting Crain's on TIFs

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Listen, Crains, Mayor Rahm doesnt need any help getting away with TIF murder.
I was lounging on the couch, watching my beloved Bulls on a peaceful Sunday afternoon, a bother to nobody, when Greg Hinz fired off the latest salvo in the great debate about TIFs.

As you should know, "TIF" is the acronym for tax increment financing, a $400-million-or-so-a-year property tax scam I've been obsessively writing about for almost a decade.

Which is either a sign of my fearless tenacity, or evidence that I long ago lost my mind.

You decide, Chicago.

Greg Hinz is, among other things, an old pal who covers politics for Crain's Chicago Business.

It's true—I've known Greg for decades. He was one of the first journalists I met when I moved to Chicago back in 1981. In fact, we used to play poker together way back when.

In defending Mayor Rahm's TIF program, Greg wrote: "The TIF program has been abused and some money misspent, mostly under former Mayor Richard M. Daley but some on Emanuel's watch, too. It's also done a lot of good. But the most obvious thing TIF has done is produce reams and reams of misinformation and bad reporting, thanks to some of my colleagues in the fourth estate."

Ouch, Greg, that's just so cold. To quote Shakespeare: "How sharper than a serpent's tooth it is to have a thankless old poker pal!"

I believe that line's from one of the bard's unpublished plays.

OK, where do I start with my rebuttal? How about correcting one of the mistakes that Greg made . . .

In trying to write a post in which he sets the story straight, Greg makes a whopper of a rookie error about how the TIF program actually works.

Greg's mistake comes in the part of his post where he's trying to argue that our dead-broke schools don't get "cheated of even a penny" in tax dollars by the TIFs—even though, of course, they've been cheated of hundreds of millions of dollars down through the years. Greg writes:

"Since CPS already is asking for the maximum amount of money it can under state law, 'CPS wouldn't get any more if every TIF district in the city was abolished tomorrow,' Chicago-based Civic Federation President Laurence Msall says. 'They're already at the levy limit.'"

Translated into regular English, what he's trying to tell us is that the schools are getting all the property tax dollars state law allows. So getting rid of the TIF districts won't bring in any extra money.

And that's just not true.

Look, I'm the last one to call attention to another writer's mistakes—of which I've made my fair share. But that big mama's hard to ignore.

One more time.

The original intention of the TIF program—and its chief value—is to be a useful tool to help develop blighted property in poor neighborhoods that wouldn't otherwise get developed.

So, for instance, if you had a vacant lot in Roseland that no developer will touch, the city can make it a TIF district. Then the developer could use a portion of the money he'd otherwise pay in property taxes to build a shopping mall.

To finish up with our example, state law specifically allows the schools to take in all the extra money paid by the owner of this newly developed mall once the TIF district is dissolved.

That's precisely because the state wants to reward cities for using their TIF program as a way to prudently invest their property tax dollars to build the tax base. If you don't believe me, read the state Department of Revenue's overview of the referendum (scroll down to page three).

In sum, the main purpose of the TIF program is to grow the tax base so we can raise more tax dollars without raising the rate.

So, yes, of course, CPS would receive more money if we got rid of all the TIF districts. I don't know exactly how much. But it would probably be enough to buy toilet paper, speaking of things our schools have had to do without in the age of Mayor Rahm.

In fact, while I'm on the subject, this gets at the heart of why Mayor Rahm's Marriott Hotel/DePaul basketball arena deal is so horrendous.

In that deal, the mayor's planning to spend at least $55 million in TIF dollars to buy tax-producing land in the South Loop that, once we own it, won't pay any property tax dollars. 'Cause government owned land is tax exempt.

It runs counter to the TIF program's purpose! In the case of Marriott/DePaul, we're spending money to lose money.

Instead of praising it, Greg, you should be joining me in condemning it, you dim—

Sorry, man. Really. That outburst was totally uncalled for. I humbly apologize. Where was I?

Oh, yes. Look, readers, I don't want you to think that Greg's completely clueless about TIFs.

For instance, it's true, as Greg writes, that Mayor Rahm's throwing less TIF dollars to corporate fat cats than Daley did in the go-go years of the 2000s, when he treated TIF money like it grew on trees.

But before we throw ourselves at Mayor Rahm's feet and say thank you, master, thank you, let's remember that TIFs are supposed to be for the poorest of the poor.

And that the poor still fare worse than the rich when it comes to doling out TIF handouts in the age of Mayor Rahm.

So that although it's nice that the mayor gave $10 million to build that Whole Foods in Englewood, he still has another $19 million to give to build anything in Englewood before it catches up with the $29 million he gave some of the world's wealthiest developers to build an upscale skyscraper in River North.

Also, it's great, as Greg notes, that Mayor Rahm's dedicating TIF money for Finkl Steel and Mount Sinai.

But, to be accurate, those deals are leftovers from the Daley administration—you can read about them right here. I loved bashing Mayor Daley as much as the next guy. But it's kind of sneaky to attack him now that he's out of power just to try to make Rahm look good. As is the rage, these days.

By and large, Mayor Rahm's using the TIF program as sort of his own little infrastructure slush fund.

I agree that's better than using it to feed $40 million to the Chicago Mercantile Exchange, as Mayor Daley once proposed.

The problem is that Mayor Emanuel's not equitably dividing the TIF-funded infrastructure pie.

Just to give you two contrasting examples . . .

In the first four years of his reign, Mayor Rahm allowed the Near South TIF District—in the South Loop, one of the fastest growing parts of town—to bring in more than $60 million in TIF money, according to city records.

Of that, he dedicated about $6 million for street resurfacing.

In contrast, the Roseland/Michigan TIF district—in one of the city's poorest areas—gathered $1.1 million. Of which nothing was spent on street resurfacing.

In another words, when it comes to TIFs under Mayor Rahm, the rich get richer and the poor get poorer. Just like under Mayor Daley.

If the mayor's going to use TIFs as a general fix-stuff-up fund, he should dole out they money equitably, so that all wards—rich and poor—get the same share.

By the way, this is the very point Mick Dumke I made back in 2010 when we wrote "The Shadow Budget: Who Wins in Daley's TIF Game." Mick, looks like it's time to write "Shadow Budget II: Who Wins Under Mayor Rahm."

Finally, Greg is right when he says there's not enough TIF money to solve all the problems we face.

I recall making the same point a few years ago, when I stood on the plaza at Michigan and Congress, talking TIFs to, of all things, an assemblage of Occupy Chicago activists.

I was speaking through a megaphone, so some of the stuff I was saying might have got lost in translation. Though I'm pretty sure even the heavy-duty potheads in the back understood the levy-cap thing better than Greg.

In any event, when you hear people tell you TIFs are just thimbles of water in oceans of need, please be aware that they're basically doing Mayor Rahm's bidding.

I understand why Rahm harps on that point. He wants you to think that $400 million a year is chump change so that you'll leave him alone to spend it any old way he wants.

Shame on you, Greg, for providing him cover.

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