Earlier this week, we wrote about how Chicago taxpayer dollars will soon be footing part of the bill for a multinational insurance company's $17 million renovation of its new headquarters in the Sears Tower.  We highlighted this case as an example of how far the tax increment financing (TIF) system has strayed from its original intent: to encourage economic development in "blighted" communities throughout the city.  How, we asked, could the Sears Tower be considered "blighted"?

Today, the Sun-Times provides yet another example of how TIF has been abused in Chicago. 

Reporters Tim Novak and Chris Fusco have been investigating the massive University Village complex built earlier this decade on the site of the old Maxwell Street market.  Their article today reports that 50 of the 187 homes set aside within the complex as affordable housing have since been resold for a profit and therefore have not remained affordable.  Worse yet, many of the original owners received taxpayer subsidies ranging from $10,000 to $25,000 -- money they essentially pocketed when they flipped these homes (thereby driving up their value). The subsidies were funded via the Roosevelt/Union TIF district, which has so far directed $10 million in revenue to the University Village project (rather than to local taxing bodies such as the schools and parks).

The city says there were rules in place to recoup those subsidies if the homes were sold within 10 years of the original purchase.  But Novak and Fusco point out "there are no records of anyone repaying those subsidies when they resold their homes."

The city also told the Sun-Times that they've since placed more stringent restrictions on resales.  Considering the lax enforcement of the original rules, that's hardly encouraging.