Over the past month, Mayor Daley's tax increment financing (TIF) system has attracted some much-needed scrutiny. First came the news that the city is forking over $3.8 million to insurance giant Willis Group Holdings to refurbish their swank new Sears Tower headquarters (despite the fact that the company's annual revenue exceeds $2 billion). Then we learned from the Sun-Times that condo owners in Chicago's University Village had benefited from TIF subsidies, only to flip their "affordable housing" for a profit (essentially pocketing those taxpayer dollars). Cook County Clerk David Orr recently summed it up well: "We’re looking at massive abuse. ...TIFs can be a good tool, but this has become a giant slush fund in the city of Chicago.”
While we could write on and on about the "massive abuse" of TIF, we're going to shift the focus slightly today -- to the hoarding of unspent TIF dollars.
During a City Council Finance Committee hearing last Monday, Chief Financial Officer Gene Saffold and Community Development Commissioner Christine Raguso found themselves on the hot seat as a handful of aldermen demanded some long-overdue answers about how the $500 million in annual TIF revenue -- along with the proceeds of the city's parking meter, Skyway, and parking garage leases -- are being managed. Ald. Ed Smith (28th Ward) got right to the point, saying, "Show us all the money. Where we can see it. All of it.
In response, Raguso and Saffold distributed a document showing the TIF system with an aggregate cash balance of $1.4 billion as of the end of 2008, including $1 billion worth of unspecified "special revenue funds" sitting in the city's 158 active TIF districts. (We first wrote about these surpluses back in January.) Take a look at the full document below (click the button in the upper-right hand corner to expand) or download it here:
Here's the takeaway: The TIF system has $1 billion in "unspent revenue from previous years" and plans to spend between $478 million and $643 million on new redevelopment projects in 2009. At the same time, the network of TIF districts will likely collect several hundred million more in "incremental property tax revenue" this year (though probably not near the $570 million collected last year). Do the math and we can assume that the surplus will still exceed $700 million or so at the end of 2009.
The city warned at the June 1 hearing that the above analysis is a work in progress and more details will emerge with the release of the 2008 district-by-district annual reports. But it's hard to imagine the numbers shifting too far in one direction or the other. Which begs the question: As layoffs loom, why isn't the city spending more of this money to create jobs and relieve budgetary pressure?
In the spring, progressive groups zeroed in on the accumulating TIF surpluses (with their own research estimating about $1 billion in unspent funds) and have since enlightened some aldermen on the subject. For instance, Ald. Bob Fioretti (2nd Ward) told us last month: "We have $1.2 to $1.5 billion available in TIF. Let's start using that to improve our roads, our streets, our lighting to keep our people moving."
But if there is going to be any progress on this front, a chorus of voices will need to demand answers regarding these unspent funds. We'll have more on this subject over the course of the week.
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Comments
Chesny (not verified) on Mon, 06/08/2009 - 15:18
Amazing.
What types of projects can TIF money be used for? And is there anyway to free these funds to plug the deficit? (I mean, isn't the diversion of money to TIF part of the reason FOR the deficit?)
Truthful James (not verified) on Mon, 06/08/2009 - 15:40
I thought that under State law the City had to hold Joint Review Board meetings on each TIF District each year, during which an accounting was provided to all the overlapping taxing bodies, that the amount of money in surplus in each District had to be accounted for, and a declaration made that there was unobligated money in that particular District. If there was surplus unobligated money it was to be distributed to the other taxing bodies, based on their pro rata share of the tax rate.
The minutes of each meeting were then to be provided to the City Council.
Either Alderman Smith is CYA his inattention to these annual reports or the City is either not holding the meetings or is not providing the Council the minutes.
Josh Kalven on Mon, 06/08/2009 - 15:47
What the report above classifies as "special revenue funds" appears to be what the annual reports classify as "future redevelopment project costs." That terminology is just a sneaky way of obligating "unobligated funds."
We wrote about this here:
http://www.progressillinois.com/2009/1/27/tif-money-looking-for-project
Pete (not verified) on Mon, 06/08/2009 - 17:44
This money should not go to creating any more city jobs - unless those jobs are police/fire.
The city headcount is already bloated with patronage positions which, at best, should be consolidated so that the salaries we pay for are actually going to something constructive.
Not simply paying back favors, or working towards to political gains.
This money needs to go back into the general revenue fund and spent wisely: schools, roads and whatever other reason Daley uses to spike fees and taxes.
Or, better put: this money is tax money which means it came from our pockets. If the city isn't going to use it, they shouldn't be taking it, in the first place.
Let's give people and businesses an incentive to stay in Chicago, not pushing them into the suburbs or otherwise out of the area.
Then again, the Olympics aren't going to pay for themselves, now are they?
And that's what this is all about.
The Olympics.
Jerry (not verified) on Tue, 06/09/2009 - 06:13
You hit the nail right on the head. As I was reading the article I was thinking the exact same thing. Daley wants that cash for the games. And since he wants it, he'll get it.
Valerie F. Leonard (not verified) on Mon, 06/08/2009 - 23:20
Great article, Angela! I want to thank Progress Illinois, Josh and you for reporting on issues that we would never read about in the mainstream media, where everybody knows the emperor is naked, but continue to pay homage to the "wonderful outfit"--and accessories to boot. Please keep up the great work!
Valerie F. Leonard (not verified) on Mon, 06/08/2009 - 23:39
We need TIF reform at the State level. Downstate Illinois really need TIFs, as they have very few economic development tools at their disposal. Chicago, on the other hand, has abused TIFs, and typically allow wealthy individuals, politically connected residents and well placed nonprofits to access funds from TIFS, SBIFS, and NIFs while tax payers have no say. A workable solution, would necessarily include a Chicago solution carved out of the legislation, with language for the rest of the state. A precedence has been set with School "Reform", in which Chicago is the only municipality that has a School CEO, while every other municipality has a duly qualified School Superintendent. The legislation also allows Chicago's Mayor to choose the CEO without input from the City Council. Every other municipality needs City Council sign off on hiring of the School Superintendent.
Kich (not verified) on Tue, 06/09/2009 - 16:31
thank you for your work on this and keep the spot light turned on. is this is the next "billion" dollar blunder that the daley administratin would like to keep us in the dark? thank you again for your efforts.
DENISE (not verified) on Sat, 06/27/2009 - 09:48
BASICALLY OUR PROPERTY TAXES ARE MUCH HIGHER THAN THEY ACTUALLY NEED TO BE, THE CITY IS ABOUT TO LAYOFF CITY WORKERS AND DRASTICALLY CUT CITY SERVICES WHILE THIS 1 BILLION DOLLAR PLUS MAYORAL PIGGY BANK SITS WAITING HIS NEXT COMMAND.
HE KEEPS SAYING THE CITIZENS WILL NOT BE ON THE HOOK FOR THE OLYMPICS BUT 80 MILLION DOLLARS IN TAX PAYER MONEY WAS USED TO PURCHASE MICHAEL REESE HOSPITAL WHY DIDN'T THE OLYMPIC COMMITTEE PURCHASE THE HOSPITAL AND THE CHICAGO PUBLIC BUILDING COMMISION (CHECK OUT THEIR WEBSITE) IS CURRENTLY SLOCITING BIDS FOR CONTRACTORS TO DO WORK AT THAT HOSPITAL THAT TAX PAYERS ARE PAYING FOR. SO WE HAVE ALREADY STARTED PAYING FOR THE OLYMPICS AND WILL CONTINUE LONG AFTER IT'S OVER.
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