A recent review of city documents shows Chicago's 150 tax increment financing districts had over $1.4 billion sitting in their collective bank accounts at the start of 2015. The review, by the TIF Illumination Project, comes as the cash-strapped city faces large budget and pension issues.
As Chicago officials look for ways to ease the city's pension and budgetary issues, a recent analysis shows the city's tax increment financing (TIF) program had over $1.4 billion in unspent funds at the start of this fiscal year.
The TIF Illumination Project, a volunteer group spearheaded by longtime Chicago activist and civic educator Tom Tresser, reviewed the 2014 annual reports for each of the city's 150 TIF districts. Those reports were issued earlier this month.
According to the group's review, the cash-strapped city had $1.44 billion in unspent funds sitting in its collective TIF district bank accounts at the start of 2015. That's down from the $1.7 billion the city had in its TIF piggybank one year earlier.
The analysis comes on the heels of Chicago Mayor Rahm Emanuel's recent move to begin phasing out seven downtown tax increment financing (TIF) districts and ahead of town hall meetings Emanuel is holding this week to gather public input on the 2016 budget.
Members of the Grassroots Collaborative say the city could address its budget situation in part with additional TIF reforms. The Grassroots Collaborative plans to outline a variety of progressive city revenue solutions, including its TIF reform proposal, before the mayor's Monday evening budget meeting. The town hall is set to take place at 6:30 p.m. tonight at Malcolm X College, 1900 West Van Buren St.
"After years of excluding neighborhood residents from the city budget process we are glad that Mayor Emanuel has decided to listen to what the people of Chicago have to say," Grassroots Collaborative Executive Director Amisha Patel said in a statement. "What remains to be seen is if the administration will take these ideas seriously. Our communities need immediate action to shift the budget burden from working families to the big banks and downtown developers profiting while neighborhoods suffer."
The city, meanwhile, did not return a request for comment on the TIF Illumination Project's numbers. But it did acknowledge in its 2015 annual financial analysis that Chicago's active TIF districts "had an aggregate balance of $1.38 billion" at the start of this year. But $1.29 billion of that amount is "reserved for payments due in connection with committed projects and projects in development," according to the city.
Tresser said he is not satisfied with the city's explanation and plans to seek details via an open records request on exactly how the unspent TIF money will be used.
"What we are looking for is contracts and bank agreements," he said. "If we're supposed to be indebted, we want to see the payment books. We really want to understand definitively why this money can't be release immediately to take care of the city and all its troubles."
TIF is an economic development program that depends on property tax dollars.
Under Chicago's TIF program, the city sets up special taxing districts in which a portion of property tax dollars gets diverted from local units of government, including the school district. The money is instead funneled into the TIF district's fund. The amount that property owners pay into their TIF district varies because it is based on the difference between what they currently pay in taxes and what they paid when the TIF district was first created. TIF districts typically have a life cycle of 23 years.
In return, companies receive public subsidies for economic development projects that will supposedly generate future property taxes inside the TIF districts. TIF money has also been used for school building construction and other public-sector and non-profit projects.
Chicago's TIF districts brought in nearly $426 million in property tax revenue in 2014, the TIF Illumination Project's analysis shows.
On the expenditure side, over $638 million in TIF money was spent last year. That's up 71 percent, or $265 million, from the TIF spending in 2013.
"The city has ramped up its TIF spending considerably," Tresser said. "So Rahm is aggressively putting money out there. And it may be no coincidence that it was an election year, where he was running around saying we're gonna spend money on this school and this project and this park."
Some TIF surplus funds also went back to local units of government last year.
Nearly $38 million in TIF money was declared as a surplus last year, according to the TIF Illumination Project. However, the city's 2015 fiscal analysis says that a TIF surplus of $39 million was declared in 2014, and another $25.4 million was released to local units of government from TIF districts that were closed.
Emanuel has declared TIF surpluses as part of an executive order he signed back in November 2013. Under the order, no less than 25 percent of unencumbered TIF funds from eligible districts are to be released annually to local taxing bodies, including the Chicago Public Schools (CPS).
A mayor-backed ordinance is pending in the city council that would make permanent Emanuel's TIF surplus measure, the first of its kind for the city.
"Codifying the TIF surplus continues four years of action to make this economic development tool more effective, efficient and transparent," Emanuel said in a statement last month announcing the TIF surplus ordinance's introduction. "Since we first enacted the TIF surplus policy, we have sent almost $250 million to Chicago's public schools, the park district and other local governments. Over the next four years we will build on that to ensure that taxpayer dollars are spent in an effective and strategic manner."
Emanuel's TIF surplus ordinance was introduced the same month he announced that he's phasing out seven downtown TIF districts after current project balances have been paid in full. No new spending in the seven TIF districts will occur as part of Emanuel's TIF changes.
Emanuel's TIF phase-out plan is expected to provide $250 million in governmental revenues over five years, with $125 million for CPS and $50 million for the city.
Over the past four years, Emanuel has closed 14 TIF districts.
Tresser wants to see more TIF districts ended. He said the city should at least freeze revenue collection and spending in all TIF districts until they undergo a "forensic audit."
"If I was the mayor," he added, "I wouldn't be asking the taxpayers to dig deeper in their property taxes until these TIFs were either canceled or completely cleaned up."