Chicago, IL-(ENEWSPF)- Cook County Clerk David Orr announced today that Chicago TIFs, Tax Increment Financing (TIF) revenue will jump 21.9 percent in the City of Chicago this year with suburban TIFs experiencing a 12.9 percent increase. As a whole, Cook County will see a TIF increase of 18.7 percent.
The Clerk’s full 2016 TIF Revenue Report shows Chicago TIFs will generate a record $561 million in tax revenue from its 145 TIFs in the 2016 tax year. This is a $100 million increase over last year and includes $18 million for the City’s first “Transit TIF” on the north side of the City (Under the unique formula used for Transit TIFs, approximately $11 million of the Transit TIF’s $18 million first year revenue will be distributed to CPS and other taxing districts impacted by this TIF.) Last year, Chicago TIF revenue increased $89 million. By comparison, suburban TIF revenue increased approximately $33 million this year, following a $14.5 million decrease last year.
1 in 4 Properties in Chicago are located within a TIF
A record 1 in 4 Chicago properties are now located within TIF districts and TIF revenue accounts for nearly 10 percent of the property tax billed within the City of Chicago. Conversely, 1 in 23 suburban properties are within TIF districts and TIF revenue accounts for approximately 3.5 percent of property tax billed in the suburbs. Countywide, 1 in 12 properties are located within TIFs and TIF revenue accounts for 6 percent of property tax billed countywide.
TIF revenues increasing
Increasing TIF revenues in the City of Chicago are primarily due to two factors: 1) levy increases by the City of Chicago ($110 million) and CPS ($273 million) to counteract pension deficits, and 2) an increase in the taxable value of property.
Clerk Orr has repeatedly called for a change to how local services are funded calling the property tax system “regressive” and an unfair burden on communities with a lower property value. Of the $5.8 billion of property tax billed in the City of Chicago this year, nearly 10 percent will go to TIF. The highest performing TIFs are once again primarily in the central business district, while neighborhood TIFs on the south and west sides of the City generate less revenue.
Clerk Orr’s recommendations for TIF reform
In light of yet another large increase in TIF revenue, Clerk Orr again recommends that unencumbered funds be declared surplus and calls on the City Council to go a step further.
“Some argue that TIFs are a good economic tool,” Orr said. “But given the financial situation in Chicago, with public school closings and increasing property taxes, many are likely to find this TIF increase alarming. If TIFs are continuously generating so much revenue that the City is declaring hundreds of millions of dollars of surplus, perhaps it’s time to cut back on TIFs.”
Orr recommends a complete review of all existing Chicago TIFs and a reduction in the number and size of TIFs in order to prevent a continued unnecessary burden on taxpayers.
“One in four Chicago properties are located within TIF districts,” Orr said. “The City Council has to vote to approve its $1.4 billion property tax levy each year in open meetings, but once a TIF has been created, additional tax revenue from TIFs – over $561 million this year alone – simply rolls in each year. This nearly 30 percent more in property tax revenue isn’t subject to the same budgetary debate process as the City’s levy.”
In March of this year, Clerk Orr hosted a TIF Forum to discuss the future of TIFs in Chicago, including a potential “Back to Basics” ordinance that was introduced in the City Council which would place stronger restrictions on any newly created TIF in the City of Chicago including requiring that “blight” be proven and that unencumbered funds be declared surplus each year. Clerk Orr continues to support this ordinance and other reforms.
Making TIFs more Transparent
“In the past, I’ve called for a number of ways to improve TIF transparency and accountability, including greater Public Debate, including full City Council review of TIF funds during the budget approval process, Follow-through by the City on its promise to retire seven downtown TIFs early, and a Responsible declaration of surplus as well as an accounting of why surplus was declared. I will continue to push for these things until I see real reform actually occur.”
The Clerk provides a number of TIF transparency tools, including the Clerk’s TIF Viewer, a TIF Property Search and an informative, “Understanding TIFs” video, all available from the Clerk’s website. The City has made more TIF data available in recent years, “but there’s still no easy way for taxpayers to easily track precisely how TIF funds are spent,” Orr said.
“TIFs can be an effective economic tool if used responsibly, but TIF generated revenue flies under the radar of many taxpayers who don’t realize they’re paying additional taxes without the same oversight as traditional property taxes. While local government has been strapped due to federal cutbacks and the governor’s lack of fiscal leadership in Illinois, the absence of accountability with TIFs is troubling.”
TIFs to Fund Public Transportation
Last year, the Illinois Legislature approved a new type of TIF, exclusive to the City of Chicago, which may run for 35 years and provide funding for public transit projects. The City does not have to demonstrate that these areas are “blighted” in order to designate them as Transit TIFs. The first “Transit TIF” was approved by the City Council in late 2016 and goes into effect for the tax year 2016 bills, which are due by August 1st.
The Red Purple Modernization Phase 1 (RPM1) Transit TIF is a mile wide and extends from North Avenue to Devon Avenue along CTA’s Red and Purple line tracks. The intention of this TIF is to repay $622 million in transportation infrastructure loans which were set up as matching funds for state and federal grants.
The new Transit TIF will generate over $18 million in its first year, though the TIF itself will only net approximately $7 million. This lower net is under state law specific to Transit TIFs, while the other $11 million generated by this TIF this year will be distributed to the other taxing districts. Districts such as CPS, the County, the Forest Preserve, Metropolitan Water, Chicago Parks, City Colleges, and the City of Chicago itself will receive incremental transit TIF revenue in addition to their normal annual tax levies.
You have used up your free articles for this month. To continue reading click here to login or subscribe.