PI Original Progress Illinois Monday December 5th, 2011, 9:33am

TIF Abuse Buoys Downtown Fat Cats, As Neighborhoods Suffer (VIDEO)

Grassroots Collaborative offers a look at the "gross misuse" of tax increment financing funds in Chicago's downtown area, explaining how it comes at the expense of some already-struggling neighborhoods.

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The following was written by Eric Tellez, an organizer/researcher for Grassroots Collaborative.

David Uriostegui understands the need for budgets. He has an eight month-old daughter. Up until recently, he worked three minimum wage jobs and continues to struggle.  And as he looks around his community, he sees neighbors barely with the means to survive.

“It’ll come one day that people are fed up living in poverty, eventually it’ll happen that people are going to rebel,” he said.

And the tipping point may be now. As Mayor Emanuel and the Chicago City Council have just decided the fiscal path of the city, an increasing amount of Chicago's residents see the Tax Increment Finance (TIF) program as helping prosperous downtown, at the expense of their neighborhoods.   

With the backdrop of the Occupy movement, policies that increase economic inequity are increasingly under scrutiny by workers like Uriostegui.

In the last few years, more attention has been placed on the role of TIFs in economic development, budgets, and equity.  TIFs divert property tax dollars away from local taxing bodies that fund schools, parks, libraries, the city, county, and other government services. These entities must then raise their tax rates to recover displaced revenue.

When Mayor Emanuel took office, there was so much controversy around the program that he eventually appointed a taskforce to revise it.

A report released by Mayor Emanuel’s appointed TIF Taskforce states that “the existence of TIF districts increases the individual tax burden on property owners both inside and outside of TIF districts.”  All city residents have to pay more taxes every year to build this pool of development money.

TIF money is intended to help create economic development in low-income, blighted neighborhoods.  But instead, city officials often give TIF dollars to multimillion dollar corporations based in the downtown area — entities that least need the assistance.

For example, documents on the city's TIF website indicate that the City awarded the Chicago Mercantile Exchange (CME) $15 million in October 2009.  Chicago's TIF website also shows that United Airlines was awarded a total $31.3 million in TIF money in two different deals in September 2009 and October 2007.

Faced with cuts to libraries, mental-health clinics, and police-station closings, residents do not understand why money can be found for downtown corporations, but not for crucial neighborhood services.

David, a leader with the community group Action Now and a resident of Brighton Park, expressed his frustration at the city’s priorities.  "You’re putting gold on top of gold and you’re putting duct tape over us," he said.

The data seems to support this idea.  

The Chicago Reader’s analysis of TIF spending from 2004 to 2008 showed that the city spent 43% of TIF money in downtown.  Meanwhile, many communities on the South, West, and far North sides have seen minimal TIF spending.  So, a program meant to address blight, in fact, reinforces it.

In his 2012 budget, Mayor Emanuel declared a 20% TIF Surplus, sending $60 million back to the schools, libraries, parks, and other government areas for 2012.  However, this left $240 million in TIF funds on the table—money that could have been used to stop cuts to vital programs and services, and avert thousands of layoffs.
 
Residents empathize with the city workers who will be laid off through Mayor Emanuel’s budget.  Rosalba Guzman, a long-time resident of Brighton Park and mother of four, understands the impact on the quality of life in the city’s neighborhoods, "Loss of government jobs will impact communities all over Chicago because those workers can't reinvest in their communities without an income," she said.
 
In fact, the public sector is one of the biggest sources of good jobs in communities of color.  A recent study by UC Berkeley showed, for example, African Americans were 30% more likely than other workers to be employed in the public sector.  Cutting library hours, closing schools, and shutting mental health clinics disproportionately hurts marginalized communities.

Service cuts and layoffs will complicate problems for local neighborhoods.  The Illinois Hunger Coalition recently released a community survey conducted in the Back of the Yards neighborhood that found although 62% of families had a full-time worker, 51% still did not have enough money get food.  The loss of additional jobs only stresses an already stretched community.

Former Mayor Daley believed that Chicago’s economic future could be secured with a strong downtown area to attract corporations and create jobs, based on the assumption that jobs would be created for Chicagoans.

Rosalba was unemployed for over a year before deciding to go back to school.  Six years of experience volunteering and interning was not enough because there were no opportunities available in Brighton Park or surrounding areas. “They should build these jobs in our neighborhood, not in downtown, there’s enough offices over there, they should build where they can give jobs to the community,” she added.

Here's more from Rosealba on the need for economic development in the city's neighborhoods as opposed to the downtown district:

According to a January 2011 article in the Chicago Reporter, the city spent over $1.2 billion during 2004 to 2008, with 55% going to Loop and Near South community areas.  Grassroots Collaborative's analysis of U.S. Census' Longitudinal Employment and Housing Dynamics data from 2002 to 2009 shows that Brighton Park’s share of downtown jobs decreased by 14.8%. Similar losses were calculated for Back of the Yards, 8.8%, and Englewood, 9.7%.  

For these three communities, downtown-focused economic development is not helping.  Brighton Park, Back of the Yards, and Englewood all struggle with unemployment; 8.3%, 13%, and 20.8%, respectively.  Downtown, in contrast, has a 7.6% unemployment rate.

Residents want to see TIF money being spent to improve Chicago's neediest areas.  Rosalba said, "Sometimes [city residents] have to decide either to pay taxes or eat, but they have to pay their taxes.  They struggle to pay and for the city to not reinvest it in the community, that’s not fair."

Without local job creation, local economic recovery remains elusive.

The City's Housing and Economic Development Department has focused TIF-generated job creation in downtown while overlooking communities like Brighton Park.  Columbia College journalists and Chicago Talks, listed all TIF agreements by the city, according to TIF district, from 2000 to July 2010.  LaSalle Central TIF district exists in the heart of downtown and Stevenson Brighton TIF district covers the Brighton Park neighborhood.  During this time period, tax increment financing created 3551 jobs in LaSalle Central and zero jobs in Brighton Park.

With Mayor Emanuel's decision to keep $240 million in TIF funds, the resulting cuts in jobs and services will be felt on the ground.  Rosalba believes that the next step for the city's residents is to really engage local elected officials, "We need to talk to aldermen and let them know we need our money, and that this needs to be solved now."

Since this is the first budget the Mayor has put together, some question what is the impression he wants to make.  David wonders, "Would you rather have only [downtown] love you or would you rather have the whole city praise you?"


This article was written by Eric Tellez, an organizer/researcher for Grassroots Collaborative. This project is supported by the Chicago Local Reporting Initiative.

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