PI Original Josh Kalven Thursday December 11th, 2008, 10:34am

Republic Windows Dispute Opens Door To TIF Reform

Shortly after pulling in a cool
$10 million in Tax Increment Financing (TIF) dollars to "bolster the
local economy," Brach's Candy Co. shuttered its West Side facility in
2003. They were rewarded with an another $880,000 TIF deal
for setting up shop in the former ...

Shortly after pulling in a cool $10 million in Tax Increment Financing (TIF) dollars to “bolster the local economy,” Brach’s Candy Co. shuttered its West Side facility in 2003. They were rewarded with an another $880,000 TIF deal for setting up shop in the former Montgomery Ward building last year. In 2005, Wrigley Co. followed Brach’s lead, closing down its South Side chewing gum plant after garnering a $15 million TIF subsidy. Almost 1,700 Chicagoans lost their jobs as a result of the company relocations and taxpayers were saddled with the costs.

As these examples illustrate, Chicago has a sordid history of doling out TIF subsidies to corporations that later squander them. Republic Windows and Doors is the latest example. Owners took $9.6 million in TIF subsidies over roughly the last decade.  Then they abruptly decided to close their Chicago factory last week, firing their workforce on three days notice while apparently purchasing an Iowa plant that manufactures similar products.

Unlike in the past, however, momentum on TIF accountability has been growing and the Republic sit-in offers the perfect opportunity to push TIF reforms more strongly.

Declining public revenues and swelling TIF accounts—which, as the Republic saga shows, are not necessarily working for the taxpayer—“has created the perfect storm for public dissatisfaction,” Cook County Commissioner Mike Quigley told us.

“It takes something like this to wake people up,” added Quigley, a longtime TIF critic. He has previously proposed allowing taxing bodies—such as school and park districts—with overlapping TIF districts to capture the revenue growth due to inflation. These increases are currently winnowed away by the city because of the way the state’s TIF law was written.

We also caught up with Ald. Manny Flores this week, who said that the Republic dispute demonstrates why more accountability needs to be written into the city’s TIF oversight rules. Flores’ staff is looking at how to go about strengthening the existing guidelines. Although he offered few details, one glaring problem is that many TIF districts don’t meet the state definition of a blighted area (for instance, the infamous Central Loop TIF district).

The now-defunct Neighborhood Capital Budget Group (NCBG), which served as the region’s leading TIF watchdog for years, presented a few guiding principals that could serve as a framework for any reform of the system. Flores and other officials should take a fresh look at the TIF Bill of Rights, and the accountability section in particular:

The people of Chicago have the right to require significant job creation and retention correlated to public subsidies.

The people of Chicago have the right to a variety of local job training options, linked to job placement opportunities.

In light of both the Republic Windows situation and the city's budget shortfall, we're going to be following this issue closely in the coming months.  If you have your own ideas for how the system can be reformed, let's start the discussion below.

Image of the Goose Island TIF district via the Windy Citizen TIF Map.

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