City of Chicago Had $1.4 Billion in Property Taxes in TIF Accounts on January1, 2017; Chicago is Not Broke

CivicLab TIF Project
CivicLab Logo: Designed by Virginia Duran and Benj. N. Sugar

CHICAGO–(ENEWSPF)–September 8, 2017. A review of the 2016 annual reports of the City’s 148 Tax Increment Financing Districts by volunteers with the TIF Illumination Project revealed some startling facts about local government finance.

At a time when 956 Chicago Public School educators and staff are being laid off and the mayor has pushed billions of dollars of new taxes and fees on the people of Chicago AND is taking taxpayers to the pay day loan repeatedly for ill-advised borrowing, our analysis reveals that as of January 1, 2017 there was over $1.4 billion ($1,418,708,994) sitting in Chicago’s TIF accounts.

A wide array of civic actors, including Cook County Clerk David Orr, the Better Government Association, the Chicago Teachers Union, Raise Your Hand for Illinois Education, affordable housing advocates and organizing efforts such as the Grassroots Collaborative have called into question Chicago’s massive TIF program. Citing the staggering amount of property taxes being held in TIF accounts, these groups, as well as the editorial boards of local newspapers, have called for a complete accounting of these funds.

This fund constitutes a giant slush fund controlled by Mayor Emanuel. The TIF Illumination Project has issued a series of Freedom of Information Act (FOIA) requests to both the Department of Planning and Development and the Office of Budget and Management to secure definitive documentation on the status of these funds. The results of this process can be found online at http://www.tifreports.com/legal_challenge. The city’s response to these FOIAs revealed that items claimed to be “committed,” and therefore NOT available for redistribution to local units of government, were actually labeled “confidential and under discussion.” The TIF funds can’t be both “committed” AND “under discussion.”

We therefore reject the Mayor’s claim that the $1.4 billion in property tax dollars are all “committed” to various projects. We call for a complete independent audit of the entire TIF program and its results made public. Until that time we recommend the program be frozen and no new funds be collected or disbursed.

“Our research over the past four years and the 50 public meetings we’ve conducted all over the city in front of thousands of people brings us to this conclusion – this is a program not to be trusted,” said TIF Illumination Project’s lead organizer, Tom Tresser. “People in every part of the city have experienced rising taxes and fees while having their schools closed or cut as well as living through high rates of violence, disinvestment and other serious problems. They don’t see how the mayor can continue to shower their property taxes on undeserving insiders and continue to hoard hundreds of millions of property tax dollars in the way we demonstrate. Tax Increment Financing as practiced in Chicago is a program off the rails and contributes to inequity, displacement and cronyism in this city. I think it’s time to give the people of Chicago an independent and comprehensive review of the entire TIF operation. One thing is for sure,” concluded Tresser, “Chicago is NOT broke.”

Other findings of our analysis of Chicago’s TIF districts for 2016 include:

  • Chicago had 148 active TIFs, an increase of two districts since 2015. Overall, Chicago has had 180 TIF districts since the program was created in 1984. A total of 32 TIFs have been closed or terminated.
  • Total Property Tax Increment extraction for 2016 = $493 million ($493,072,706). This is the amount of property taxes extracted by Chicago’s TIF districts and diverted from local units of government that rely on property taxes for their operation. 56% of Chicago property taxes, or over $247 million, was SUPPOSED to go to the Chicago Public Schools.
  • Chicago’s 148 active TIFs have collected a total of $4.7 billion ($4,652,279,465) since they were created. Chicago’s terminated TIFs extracted $1.9 billion ($1,971,755,349) in property taxes while they were active. All in, Chicago’s TIFs have collected a staggering $6.6 billion ($6,626,034,814) through 2016. The biggest extractor was the Central Loop TIF (#014) which took almost $1 billion ( $987,767,890) from 1984 through 2008.
  • The Top Ten TIFs collected a total of $232 million (in property taxes in 2016. These are the “champions” in terms of property tax extraction.  The Number One TIF = LaSalle/Central (#147), collected $31.7 million in 2016. This Top Ten list is shown below. The Top Ten TIFs in terms of fund balance were holding $570 million ($570,316,232) in property taxes on January 1, 2017. The TIF with the largest fund balance was the Kinzie TIF (#052) holding $77.6 million.

The public policy issue here is striking – these top performing TIFs are all in or near the Loop or Central City. Having TIF districts all across the hottest performing real estate in the city bloats those TIF funds with over one half of one billion dollars in property taxes that can not find their way to build parts of the city suffering from disinvestment and the “blight” the TIF program is supposed to combat. By contrast, TIFs placed in the poorest parts of the city naturally continue to under-perform and will not produce revenues to improve those communities. In this way TIFs are anti-distributional and contribute to Chicago’s history of neglecting poor communities of color. Ironically, the ward with the most of its land mass in one TIF or another is the 24th Ward which includes West Lawndale, a community that needs serious civic attention and investment.

  • 88 TIFs take at least 50% of property taxes collected inside their borders.  23 extract at least 90% of property taxes collected from some or all of the properties within their borders.
  • Total expenditures from Chicago’s TIFs in 2016 were $355.6 million ($355,646,1663). This is how much all of Chicago’s TIF districts spent in 2016. The biggest spender was the Near North TIF, spending $46.2 million. $15.5 million  was given to the Board of Education for the Walter Payton High School expansion and $22.3 million from that TIF was given to the Amalgamated Bank for paying down bonds.
  • Total revenues transferred INTO TIFs in 2016 was $59.7 million. This was how much revenue was placed INTO TIF accounts from other TIFs. Total “surplus” revenues from TIFs distributed out to local government sources was $117 million ($117,311,302). In total, $179 million of TIF funds were moved around the city (36% of all that was collected in 2016).

The public policy issue here is one of transparency and accountability. What triggers so much public money moving from one part of the city to another? What reasons are given for redistributing over one third of the TIF funds collected in 2016? If there are no clearly explainable legal claims on so much public money (that would cause these funds to be locked in place) then those dollars should not be collected by TIFs in the first place. This is another compelling reason to freeze the entire TIF operation until an independent and public review can be conducted.

  • Two new TIFs came online in 2016:
    • Diversey/Chicago River (#179) and The Red & Purple Line Modernization Super TIF (#180). These two TIFs are notable for a number of reasons. Community groups have been protesting the creation of the Diversey/Chicago River TIF because it is expected to spend $17,500,000 toward the development of a mixed-use project on the site of the Julia Lathrop CHA Housing Project. This includes $12,500.000 to the developer. This project has been subject to repeated protests from a wide range of community groups.
    • The Super TIF is unprecedented in Chicago’s development history and runs from Devon Avenue to Division Street about one half mile wide with the Red Line tracks roughly bisecting the district. This district will be extracting property taxes for an uncommonly long 36 year period. It was created to fund the modernization of the Red and Purple Lines. There is no “blight” requirement for this TIF. The Chicago Public Schools are NOT harmed by this TIF and will collect their normal share of property taxes but 80% of the non-CPS portion is to go to the TIF and 20% of the non-CPS portion will be distributed proportionally to other taxing districts. [Details: http://cookcountyclerk.com/tsd/DocumentLibrary/2016%20Transit%20TIF%20RPM1%20Fact%20Sheet.pdf]
  • The TIF Illumination Project looked at the financing costs associated with Chicago’s TIF districts. In 2016 16 TIFs used property taxes to pay a total of $78,809,871 in finance charges to four banks.  The banks were:
Wells Fargo $4,545,235
Amalgamated Bank 43,318,832
Zions Bank 28,781,804
JP Morgan Chase 2,164,000

The public policy issue is one of sound public financing. It appears that most of the debt being paid down by Chicago TIFs are related to two series of bonds issued in 2007 and 2010 to pay for Mayor Richard M. Daley’s New Schools Across Chicago Program. What are the total terms of these notes? How much have we paid to these banks, at what profit and how much longer will be paying? Chicago has an unfortunate history of getting into bad deals with banks that extract onerous fees that the taxpayers routinely must pick up. Is this another example? The CivicLab lacks the expertise to get the answers.

  • The Department of Planning and Development extracted $8.4 million ($8,408,986) for staffing costs from 93 TIFs.  This might be called “skimming the skim.”

The public policy issue is also one of accountability and oversight. The department is a cabinet level agency that has a budget submitted by the mayor and approved by City Council. Why are they allowed to pick up an extra $8.4 million (a figure that has been consistent over the past few years) for doing what work? Shouldn’t the City Council approve any such increase in a department’s operating budget?

  • Our most striking number was the finding that over $1.4 billion in property taxes was sitting in TIF accounts on January 1, 2017. Chicago is not broke.

The Top Ten TIFs by property tax collection for 2016 were:

TIF 2016 TIF # Created Expires 2016 Property Tax Extraction Cumulative Extraction
LaSalle/Central 147 2006 2030 31,744,181 168,813,927
Kinzie 052 1998 2022 28,278,344 246,553,784
Near North 030 1997 2022 27,069,215 229,098,832
Canal/Congress 063 1998 2022 25,715,500 243,579,904
Chicago/Kingsbury 094 2000 2024 24,813,487 188,821,904
River South 037 1997 2020 24,245,090 177,728,516
Central West 086 2000 2024 20,258,781 172,703,975
River West 104 2001 2025 18,823,186 142,748,241
Calumet/Cermak 059 1998 2021 16,734,552 138,005,568
Midwest 095 2000 2024 14,491,670 160,852,324

The Top Ten TIFs by fund balance in 2016 were:

TIF 2016 TIF # Created Expires 2016 Property Tax Extraction Cumulative Extraction Balance @ End of 2016
Kinzie 052 1998 2022 28,278,344 246,553,784 77,619,700
Canal/Congress 063 1998 2022 25,715,500 243,579,904 68,714,936
Central West 086 2000 2024 20,258,781 172,703,975 67,932,470
Chicago/Kingsbury 094 2000 2024 24,813,487 188,821,904 67,738,444
River West 104 2001 2025 18,823,186 142,748,241 58,983,767
LaSalle/Central 147 2006 2030 31,744,181 168,813,927 54,433,791
River South 037 1997 2020 24,245,090 177,728,516 48,195,486
Near North 030 1997 2022 27,069,215 229,098,832 47,996,642
Midwest 095 2000 2024 14,491,670 160,852,324 39,629,012
Pilsen 053 1998 2022 12,597,360 133,633,900 39,071,984

The Top Ten TIFs by expenditures in 2016 were:

TIF 2016 TIF # Created Expires 2016 Property Tax Extraction Cumulative Extraction 2016 Expenses
Near North 030 1997 2022 27,069,215 229,098,832 46,222,787
LaSalle/Central 147 2006 2030 31,744,181 168,813,927 23,997,354
47th/King 118 2002 2026 6,960,378 78,480,680 18,445,813
Chicago/Central Park 115 2002 2026 5,563,243 63,449,858 17,094,739
Pilsen 053 1998 2022 12,597,360 133,633,900 15,954,601
Midwest 095 2000 2024 14,491,670 160,852,324 12,817,862
24th/Michigan 072 1999 2022 1,680,732 12,914,166 10,687,830
Kinzie 052 1998 2022 28,278,344 246,553,784 9,533,086
Central West 086 2000 2024 20,258,781 172,703,975 9,474,206
Galewood/Armitage 071 1999 2023 2,508,206 31,126,688 9,214,856

The TIFs that collected NO property taxes in 2014 were:

51st/Lake Park
Calumet River
Chicago Lakeside
Diversey/Chicago River*
Irving Park/Elston
Red/Purple Line*
South Works
Little Village
West Woodlawn
*created in 2016

23 TIFs extracted 90% or more of property taxes from some or all properties in their boundaries in 2016:

TIF # TIF Year Created TIF takes at least 90% of property taxes
141 26th/King 2006 100%
002 41st/King 1995 96%
004 49th/St. Lawrence 1995 92%
124 67th/Cicero 2002 100%
010 126th/Torrence 1994 93%
067 Archer Courts 1999 98%
013 Bryn Mawr/Broadway 1996 97%
059 Calumet/Cermak 1998 98%
063 Canal/Congress 1998 92%
094 Chicago/Kingsbury 2000 90%
122 Drexel 2002 98%
130 Edgewater/Ashland 2003 96%
021 Englewood Mall 1989 92%
119 Lakefront 2002 100%
028 Lincoln/Belmont/Ashland 1994 96%
126 Madden/Wells 2002 99%
029 Michigan Avenue/Cermak 1989 93%
173 Montrose/Clarendon 2010 100%
030 Near North 1997 92%
100 Ohio/Wabash 2000 94%
037 River South 1998 97%
104 River West 2001 90%
068 Roosevelt/Union 2000 95%
[23 TIFs]
Data from Cook County Clerk “Tax Increment Agency Distribution Summary” 6/23/17

Hundreds of millions of property tax dollars continue to move around the city, from one TIF into another and funds from TIFs are sometimes redistributed to local units of government. TIF Illumination Project gathered the details of these transfers on our web site at http://www.tifreports.com/2016-tif-analysis.

For a list of all 32 TIFs that have been terminated please visit http://www.tifreports.com/2016-tif-analysis.

The TIF research was coordinated by Lead Organizer Tom Tresser (www.tresser.com). Tom is a long time educator and organizer and public defender in Chicago. He was the co-founder of the CivicLab with Benjamin Sugar – which was America’s only co-working space dedicated to collaboration, education, fabrication and innovation for social justice and civic engagement. The CivicLab operated for two years in the West Loop and closed on June 30, 2015 (www.civiclab.us). In 2008 he was a co-founder of Protect Our Parks which sued to stop the privatization of Lincoln Park (www.protectourparks.org). In 2009 he was a co-organizer of No Games Chicago which worked to defeat the bid for the 2016 Olympics (www.nogameschicago.com). He curated and published “Chicago Is Not Broke. Funding the City We Deserve” in July of 2016. This book has triggered 54 public meetings across the city in one year (www.wearenotbroke.org). In May of 2017 he co-founded The POWER Institute (People Organizing to Win, Engage & Resist) with Jonathan Peck (www.powerinstitute.us). He can be reached at 312-804-3230, [email protected]
The 2016 TIF research was conducted at the City Bureau with a cadre of their Documenters under the supervision of Darryl Holliday. Founded in 2015, City Bureau is a civic journalism lab based on the South Side of Chicago. The City Bureau brings journalists and community members together in collaborative environments to promote responsible media coverage, increase civic engagement and hold powerful forces to account. Their three programs are the Public Newsroom, Documenters and Reporting Fellowship (www.citybureau.org). The Documenters team included Puja Bhattacharjee, Maximillian Boudreaux, Maggie Flynn, Tucker Kelly, Bianca Medious, Pat Nabong, Bridget Vaughn and Shinda Williams. Research was also contributed by CivicLab volunteers Sarah Dennis and Angela Spinazze. Proofing assistance was from Merle Tresser. Thanks to them all!

The TIF Illumination Project is online at http://www.tifreports.com. Since 2013 it has revealing the impacts of TIFs at the ward level. We show how much property taxes are extracted from inside each ward by the TIFs IN that ward. We produce graphic posters that contain a map of the ward showing:

  • The shapes of all TIFs that are in the ward
  • How much revenue those TIFs took from properties just IN the ward
  • How much revenue FROM the ward was left in the in-ward TIF accounts at the end of the year
  • Who has received TIF funds inside the ward
  • How much money was transferred in our out of these TIFs
  • How much money the Department of Planning skimmed from these TIFs for its own use

The TIF Illumination Project distributes these graphic posters at TIF town meetings, or Illuminations, that have been independently organized by residents of the community. Since February of 2013 we have investigated and Illuminated 141 TIFs across 33 wards before over 4,500 people. Our heartfelt thanks to the dozens of volunteers who help organize these meetings.

The complete record of these is online at http://tifreports.com/tif-town-meetings.  Presentations from these meetings can be purchased at our TIF Data Store at http://www.tifreports.com/store.

We have produced two TIF training videos via crowdfunding campaigns. “TIF 101” (22 minutes) explains the basics of Tax Increment Financing and features Professor Rachel Weber from the University of Illinois at Chicago and Cook County Clerk David Orr. “TIFs Off the Rails – Public Policy Problems with Chicago’s TIF Program (17 minutes) features Professor Richard Dye of the University of Illinois and Professor Stephanie Farmer of Roosevelt University. These videos are available on YouTube at http://www.tifreports.com/training_videos.

Although the CivicLab is closed we gratefully acknowledge the support of the Voqal Fund which helped keep the CivicLab open and thus provided a base for the TIF Illumination Project to do its work. Requests to support this work have been turned down 15 times by local and national funders over the past four years.

Source: http://tifreports.com




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