In the past few weeks city officials have been leaking their plans to spend hundreds of millions of dollars rehabbing downtown office buildings, building new transit lines, and improving infrastructure throughout the Loop. The word around City Hall is that the flurry of announcements heralds the start of two campaigns: Mayor Daley's run for reelection and his effort to extend the soon-to-expire Central Loop tax increment financing district to pay for a major portion of the proposed development. It's a bit of a stretch to say the battle for the downtown TIF, set to end next year, is as crucial to Daley as his reelection, but it's not that far off. The administration's addicted to TIFs, which let the mayor keep his grip on city operations and give him a powerful weapon for keeping the City Council in line.
For the record, administration officials say they haven't decided whether they'll ask the City Council to extend the Central Loop TIF, which collected about $88 million in property taxes last year. But hardly anyone believes them. As insiders see it, city officials are quietly gauging the accommodations they'll have to make in order to win support for extending or even expanding the TIF. "If you think Daley's going to give that up, you're naive," says one county official. "He's just putting on the window dressing to make it look good to the public."
A TIF caps the property taxes that get paid to entities like the Chicago Park District, the Board of Education, Cook County, and the Metropolitan Water Reclamation District for a period of 23 years. So let's say you were paying $1,000 a year in property taxes when a TIF was created in 1995, with about $500 going to the schools, $70 to the parks, and $73 to the county. That's roughly what they can expect to get from you, no matter how much your property assessment goes up in the meantime. The extra--the increment, as they call it--goes into the TIF, to be spent at the discretion of the city's planning department and the local alderman. The idea is to use the funds to spur development within the TIF's boundaries, theoretically increasing the property tax base in the future.
Once adopted, TIFs practically disappear from public view. They're not listed in the city budget or even, believe it or not, on your tax bill. The city offers no easy way for you, the citizen, to track a TIF over time to see how much is raised and spent. There's an annual budget statement for each TIF, but it's little more than an actuarial statement--money in, money out. And they aren't posted on the Web. You can only get them from the planning department or at the municipal reference section at the Harold Washington Library Center.
You can't even get a straight answer as to how much of your property tax bill is going to a TIF. If you live within a TIF district, your tax bill lies. Under the line item for the TIF it will say the fund draws zero dollars. In fact, if your property was built after the TIF was created, all of your tax dollars could be going to it.
Obviously, Daley and the City Council love TIFs--they've created more than 100 of them over the last ten years. Last year they diverted about $335 million in property taxes, up from $287.4 million in 2004. By law they're supposed to be limited to blighted communities that would find it difficult to attract investment without the sweetening offered by a TIF. But given their minimal oversight, they in effect function as private piggy banks to be drawn on when, where, and how Daley and the local aldermen want. There's TIF money going to upscale projects in gentrifying neighborhoods--the city's even spending $46 million in TIF dollars to rehab buildings on Loyola University's north lakefront campus, a public subsidy for a private institution that doesn't pay property taxes. From the time the planning department officially proposes a TIF to the time the City Council approves one, people who owe their jobs to Daley or to people who owe their jobs to Daley run the process.
The Central Loop is the big daddy of all the TIFs. Originally created in 1984 by Mayor Harold Washington to cover 15 blocks in the north Loop, it was expanded in 1997 to cover pretty much everything between Michigan and Dearborn, running from the Chicago River down to the Congress Parkway. Community activists opposed the expansion, noting that it diverted hundreds of millions in property tax dollars from a public school system in desperate need of cash to a corner of the city that was already booming. "This TIF expansion amounts to a tax grab for downtown developers," said Ted Thomas, board president of the community group ACORN, at the time.
But Daley prevailed, arguing that the approximately 15 office buildings in the area with occupancy rates below 90 percent qualified the district as blighted. Over the last five years the TIF has diverted at least $350 million in property taxes--$88.1 million last year alone--according to the Cook County Clerk's annual statement.
And what did we get for all that money? According to studies by Jason Hardy and Art Lyons, researchers at the nonprofit Center for Economic Policy Analysis, it's been used to finance over $100 million in public works improvements, including streetscaping, street lighting, and repairing sidewalks. About $6.6 million went to convert the Fisher Building at 343 S. Dearborn into luxury rental apartments, another $2.5 million went to convert the Mentor Building at 37 S. State into condos, and about $25 million went to convert or rebuild several hotels including the Hotel Allegro, the Hotel Burnham, the Oxford House, and the Saint George. A big chunk of the money--roughly $60 million--went to rehab or rebuild the Chicago Theatre, the Goodman Theatre, the Oriental Theatre, and the Cadillac Palace Theatre. And of course, the Central Loop TIF was there when Daley needed it most: he plucked $95 million from it to cover cost overruns at Millennium Park.
The city sees all this as signs that the TIF has been a smashing success. "It has been successful in bringing in new business, new retail, new visibility, new commercial, new entertainment to the downtown area," says Constance Buscemi, a spokeswoman for the planning department.
But this very argument makes it hard to justify extending the TIF another 23 years: if the area's booming, why is it in need of even more subsidies? "You can't have it two ways," Hardy says. "You can't say the TIF has transformed the Loop and then say that the Loop is still blighted."
As Hardy points out, the argument for the TIF has always been that it will eventually benefit the schools and parks by expanding the tax base. But if the TIF gets extended it will just keep feeding itself. Already the original 15-block north Loop TIF district is providing less in property taxes than when it was created back in 1984. According to the city, the north Loop tax increment redevelopment plan generated $5,407,659 in 1982. Last year that property generated only about $3.5 million because the assessment remains frozen at $54.5 million and the tax rate has dropped to 6.28 percent.
Don't expect these issues to be debated by the City Council, which treats TIFs like zoning changes, generally going along with whatever the local alderman wants. As more than one alderman has told me, TIFs are the only game in town. If you want a TIF in your ward you have to be for TIFs in every ward.
Perhaps no one illustrates this point better than Ted Thomas, the ACORN activist who denounced the Central Loop TIF expansion back in the day. Now he says he'll support its extension. What's changed? Thanks to the prominence he gained as president of ACORN, he was elected alderman of the 15th Ward in 1999. After several years of representing his southwest-side neighborhood on the council, he says he's seen the light on TIFs. In fact, he proposed one for his ward that the council unanimously approved earlier this year.
"When I was president of ACORN I was looking at things from that point of view," he says. "Now as an alderman, I'm pushing for a TIF in my ward. If the alderman wants something for his ward, the other aldermen should help him do it. It's how you get things done."
Art accompanying story in printed newspaper (not available in this archive): photo/Robert Murphy.