A document recently released by the Daley adminstration shows that the City of Chicago's tax increment financing system is running a $1 billion surplus.
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.