Entries associated with the tag "Tifs":

It was the Park District's annual make-a-wish night at the Loyola Park Field House Tuesday.

That's when Park District officials -- in this case, Brian Loll and Matt Marino -- hold meetings where the little people parade past and tell them what improvements, additions, expansions, or new programs they'd like to see for their local parks.

Before the meeting began, Loll and Marino assured folks that they would take careful notes and convey suggestions back to parks superintendent Tim Mitchell and other Park District big shots, who were preparing next year's budget.

With that, the peasants made their pleas for money to fix floors and roofs, trim weeds, plant gardens, hire staff, restore cut funding, and even, in one extravagant instance, build a swimming pool. 

I was hoping someone might suggest the Park District raise money by selling the Streeterville office it bought for $22 million, but that didn't happen. So for me the highlight came when Lincoln Park resident Tom Tresser played a wild card and called for "a sunset on TIFs ."

Pointing out that the city's 160 or so tax increment financing districts divert about $37 million a year in property taxes away from the Park District alone, Tresser said "We wouldn't be fighting for scraps" if the city stopped creating TIFs. "It's our money," he said. The audience clapped, but neither Loll nor Marino said a word. They didn't bat an eye, just took it all down along with the plea for cleaner bathrooms in the Loyola Park field house.

Personally, I'd love to be there were they to bring this suggestion before Mitchell, a former mayoral chief of staff, who knows as well as anyone how the system works: "Uh, boss, you know the mayor's favorite honey pot -- the one that feeds him $500 million a year in property taxes? Well, some nut on the north side wants us to shut it down."

Actually, I have a funny feeling Tresser's suggestion won't make it to Mitchell, much less Mayor Daley. The mayor gets red in the face over relatively little things, like the foie gras debate. The suggestion of a moratorium on TIFs would probably turn him purple. 

In a recent comment on a blog post, Paul N. Keller, one of my favorite TIF attorneys, suggested that I haven't read the state's TIF act.

Oh my god, that is just, like, so not true. The state's TIF act is one of my favorite reads. I keep a copy of it by my bed and read a passage every night before I go to sleep. It's terse, transparent, and immediately comprehensible to anyone with even a rudimentary understanding of English.

Plus, it's riveting. Sometimes after I turn off my light, I lie in bed and play back its words in my mind. Here's just one of my favorite passages randomly selected from this work of art:

"'Payment in lieu of taxes' means those estimated tax revenues from real property in a redevelopment project area derived from real property that has been acquired by a municipality which according to the redevelopment project or plan is to be used for a private use which taxing districts would have received had a municipality not acquired the real property and adopted tax increment allocation financing and which would result from levies made after the time of the adoption of tax increment allocation financing to the time the current equalized value of real property in the redevelopment project area exceeds the total initial equalized value of real property in said area."

Wait, wait -- there's more . . .

Folks in City Hall have been e-mailing around TIFs for Tots, a devilish satire penned by Adam Verwymeren, a journalism student at Medill.

The primer manages to explain TIFs in language that just about anyone -- even your average alderman or City Hall reporter -- can understand.

Why is the City Hall crowd getting such a kick out of it? Partly because TIFs have always been an inside joke to planners, lawyers, and developers who still can't believe that so many adults remain clueless about the mayor's $500-million-a-year slush fund.

I give Verwymeren an A for his primer. It's accurate, clearly written, easy to understand, funny, and to the point. My favorite part is where he writes, "Some people say TIFs are like a big piggy bank for the mayor to use for whatever he wants. And these people say we can't trust the mayor."

In other words, "TIFs for Tots" is the opposite of the city's own primer -- The ABCs of TIFs [PDF} -- which is misleading, obtuse, and riddled with errors.

Verwymeren's a pretty smart guy. The city should hire him. But they wouldn't think of it. He's too honest.  

I hope the International Olympic Committee saw Greg Hinz's recent story in Crain's Chicago Business about the latest development in the ongoing debacle of Mayor Daley's dream to build a superstation below Block 37.

According to Hinz, the project is so far behind schedule and over budget that the city's going to have to spend another $20 million in TIF funds just to pay off existing debt.

Again, this $20 million is just to pay back off existing debt. It isn't to complete the project -- the city still hasn't figured out how they're going to pay for that. With the new expenditures, the project -- originally budgeted at $213 million -- will have consumed about $320 million.

"Until even more money is found," Hinz writes, "the semi-completed station will be mothballed, much like an unfinished basement in a home whose owners has poured the concrete but can't afford to install carpeting, paneling and other finishing touches."

And even when -- or if -- the city figures out how to complete the project they still can't use it because it doesn't have any tracks to run on. The line is intended to provide high-priced express service for tourists, business execs, and other high rollers zipping between the Loop and Midway and O'Hare. But there are no tracks on which to run the express service. Eventually the city plans to seek bids from private companies looking to build the tracks and operate the line. Either that or the express service will have to share existing Blue and Orange line tracks so the high rollers save a few extra minutes on the ride downtown.

I remember when the City Council passed the funding for this project back in 2005. A few aldermen told me they voted for it because they had no choice--it was one of the mayor's pet projects. Keep in mind, the Olympics is another one of Mayor Daley's pet projects -- which everyone, including Barack Obama -- feels compelled to endorse.

Let's hope the IOC gives the games to Rio. It will be a miracle if this bunch gets through the games without driving us bankrupt. 

Over the years I've heard countless explanations from various aldermen of what TIFs are and how they work.

I've heard aldermen Berny Stone and Ed Burke claim that TIFs don't raise property taxes, even though they obviously do. I've heard former alderman Patrick O'Connor say that the operating details of TIFs are just too complicated for ordinary people to understand, so why bother explaining. And I've heard everyone from former alderman Ted Matlack to alderman Pat Levar get lost in the netherworld of tax increment financing until all eyes glazed over.

But yesterday up on the northwest side I heard something unique. Speaking before a group of residents who wanted his opinion about a TIF-funded school proposed for their community, 38th Ward aldermen Tom Allen told something close to the truth. TIFs, he said, are "slush funds" created by raising the property tax.

Why is the city using them to build new schools? someone in the audience asked.

Because it's embarrassing to keep doling them out to developers, he explained. "We've got this little slush fund called the TIFs just sitting there. We [the aldermen] started convincing the [Daley] administration to have to cut loose this money."

Maybe Allen's gearing up to take the bold step of voting against future TIF districts, which require City Council approval.

At the same meeting Allen took a survey, asking his listeners whether they supported putting the Children's Museum in Grant Park.

The audience erupted with a chorus of nos, firing off a barrage of questions and comments: Why put it there? How much stuff are they going to cram in that park? They should put it somewhere that really needs it.

This meeting was being held in the basement of a church near Cicero and Addison, mind you. So Mayor Daley can't accuse these people of being high-rise dwellers who want to keep black children out of their neighborhood.

"When Mayor Daley gets mad at me, will you stick up for me?" asked Allen, strongly suggesting that he planned to vote against the museum.

"Will you stick up for us?" one resident responded.

Ah, Chicago, city of deals. 

It's almost enough to make you feel sorry for Sam Zell. All the guy's doing is asking for a handout, the sort of thing Mayor Daley dishes out to developers all the time.

"The Trib's Selling and We're Not Buying," read the front page of today's Sun-Times. "Only Sam Zell and his Tribune Co., owners of the ballpark, stand to gain. And in an economic downturn, only the taxpayers stand to lose."

The headline and accompanying editorial -- which had me cheering over my morning coffee -- are referring to the state's proposal to use sales taxes to buy and rebuild Wrigley Field so whoever owns the Cubs can sell more tickets and concessions and make more money.

The paper's zeal is goosed by wanting to make things uncomfortable for its rival, of course, but it's an encouraging turn of events nevertheless. When it comes to corporate welfare, the Wrigley Field proposal is only the tip of the iceberg. In the last year or so, the city's agreed to fork over $8.5 million to Grossinger Auto Corp. to build a car dealership at North and Clybourn, $51 million to a consortium of developers to convert the old downtown post office into a luxury hotel and condos, $58 million to developers to build an 18-story tower on top of Union Station for another hotel and even more upscale condos, $5 million to Navteq, the hugely successful navigations technology company to move from the Merchandise Mart to 100 N. Riverside, and $880,000 to Barry Callebaut to move its corporate office into the old Montgomery Ward building at 600 W. Chicago. Callebaut, by the way, was the company that closed the Brach's candy factory, throwing roughly 3,500 west-siders out of work.

These are all, of course, just some of the more egregious handouts from various tax increment financing districts, the mayor's favorite slush fund. Whenever I talk to community groups about TIFs they want to know why the Tribune and the Sun-Times aren't writing about this scam. In private writers from both papers have told me that their editors basically think the issue's too complicated for their readers to understand.  

I think they're underestimating the public's intelligence. In fact, today's Sun-Times editorial did a great job of spelling it out in language that pretty much anyone can follow. In this case, they're writing about a diversion of sales taxes, but the same principle applies when the city diverts property taxes for TIF deals. 

"Sales taxes are intended as a source of general revenue to help cover the myriad costs of local government -- teaching children, paying police officers and fixing pot holes," the Sun-Times wrote. "When significant sales tax revenues are diverted to a single special purpose, such as paying for a ballpark, the tax burden grows that much heavier on everyone else."

I couldn't have said it better myself . . .

He's at it again.

In this week's Works, I wrote about a recent press conference where Mayor Daley denounced  the county assessor's office and called for widespread "corrections" to property tax assessments.

Now, in today's Tribune, there's an op-ed by the mayor that tells a few more whoppers about his role in our property tax system.

For starters, he claims that he "proposed the original plan that became the 7 percent cap on the taxable value of homes." Not only did Daley not propose the original plan (Cook County assessor Jim Houlihan did), he did very little of the lobbying needed for the watered-down version that passed.

But the big daddy of tall tales in his editorial is this one: "Even with the increase in Chicago property taxes in this year's budget, city property taxes have risen a average of only 1.5 percent a year since I've been mayor."

The only reason Daley can make this claim is because he's not counting hikes in school taxes and, more to the point, he doesn't regard TIFs as property taxes that residents have to pay. Instead, the mayor's official policy is that TIFs dollars are created by some sort of magical City Hall money-making machine at no expense to taxpayers.

But as Cook County clerk David Orr's TIF report makes clear, that's just not so. In 2004 Chicagoans paid $328 million in property taxes to the TIFs; in '05 the TIF property tax take went up to $386 million, and in '06 it rose to $500 million. I suspect the TIF tax surpassed $600 million in 2007, but we won't know for sure until Orr's office completes the official tally in the summer.

Once you factor in the TIFs you get a more realistic idea of why your property tax bill is rising. In 2005, taxpayers paid about $719 million in taxes to the city and another $386 million to the TIFs for a total of about $1.105 billion. In 2006, they paid about $736 to the city and $500 million to the TIFs, for a total of $1.236 billion. That's an $131 million increase, or 12 percent.

In time the amount of property taxes Mayor Daley collects through TIFs -- while claiming you're not really paying into them -- will exceed the amount he officially acknowledges you are paying. We'll be paying twice as much in property taxes as the city acknowledges we are.

It's one thing for Mayor Daley to dwell in a dream world where property taxes aren't really property taxes. But the rest of us still have to pay the bill. 

2008 could be the year of Tony Rezko's redemption in court, or progressive tax relief for area voters. But we don't think so. Here's a few more likely scenarios:

Olympics In June, the International Olympic Committee will select Chicago as one of its four finalists for the 2016 games (the final finalist will be chosen in 2009). Mayor Daley will prepare to spend two more years explaining how the games will be financed without public tax dollars and why we need Frank Kruesi to carry the Olympic torch into Soldier Field.

TIFs TIFs, which collected $500 million in property taxes in 2006, will take in at least $600 million in 2007 and $800 million more in ’08. Mayor Daley and the aldermen who help decide how to spend the money will continue to insist it isn't a tax hike while creating new TIF districts for "blighted" sections of the Mag Mile.

Police misconduct After working through the final legal snags, loopholes, and kinks, the city will finally agree to settle the lawsuits accusing police of torture under former commander Jon Burge. Aldermen will be relieved to put this issue behind them so they only have to approve payouts for routine police beatings and shootings.

CTA bailout State leaders will find money to let the CTA avoid cutting all but a few bus routes on the city’s south and west sides while continuing to employ former aldermen, ousted mayoral aides, and other middle managers sent over from City Hall.

Cook County Board President Todd Stroger will remain the favorite scapegoat for anyone interested in playing reformer while providing jobs for his friends, cousins, in-laws, nieces, and nephews.

Council progressives Reform-minded aldermen will realize they need some help organizing an independent caucus in the City Council and decide Mayor Daley is exactly the guy who can get it done.

New taxes The city will consider taxing residents 5 cents per toilet flush to raise money for the legal defense of alleged Shakman Decree violators. 

New lease arrangements Having worked out a deal to lease Midway Airport for an infusion of cash into the city’s coffers, Mayor Daley will propose to lease Lake Michigan to DuPage County.

The city blinked.

That's the initial reaction from people in Lincoln Square regarding the city's retreat from plans to use eminent domain to force out all the businesses on the east side of the 4800 block of North Western. On the proposed deal the land would have been turned over to an undetermined developer, who would replace the existing buildings with condos and retail. Funding for the acquisition was to come out of the Western/North TIF.

It was actually one of the more interesting twists on use of the program. TIFs (or tax increment financing districts) are intended to subsidize development in blighted communities that would otherwise find it difficult to attract investment. In this case, however, 47th Ward alderman Gene Schulter was seeking public funds to keep private development out -- at least a certain kind of private development.

Schulter contended that the commercial strip, with its booming residential base, was starting to attract the interest of big-box chains. By beating the big boxes to the punch, he said, his plan would actually protect small businesses and help keep the community free of too much traffic and congestion. Sure, in this case protecting small businesses meant threatening them with government seizure of their property. But the declaration of eminent domain alone would help keep the Best Buys at bay: there's no market for land the city can snatch at will.

It was a classic case of the up-is-down, down-is-up logic peculiar to TIFs. As mandated by state law, the city commissioned a consultant's report, which argued that the area needed a TIF handout to stave off blight and underdevelopment. Meanwhile Schulter and planning officials kept insisting that tens of millions were needed to prevent overdevelopment.  

Most TIF deals are consummated in the shadows, with hardly any opposition. This one attracted major heat from the start. Merchants and property owners on the block didn't want to sell, and resented the threat of being forced to. It was, they said, downright un-American for the city to snatch one person's property only to turn it over to someone else. The Castle Coalition, a national property-rights organization, rallied to the cause. On December 5 some 300 residents showed up for a rally at Chicago Soccer, a sporting goods store at 4839 N. Western. After the meeting, a large group of protesters marched over to Schulter's Lincoln Avenue office to demand that he drop the scheme.

On Monday, December 10, just two days before the City Council was scheduled to vote on the proposal, Schulter called several merchants to his office to tell them the city had had a change of heart. (Schulter has since said he'll submit a revised ordinance to the housing committee in January.)  

Why'd the city back down? Schulter says what he's maintained all along: the plan was never written in stone, and he listens to the desires of his community.

I suspect the December 5 demonstration had something to do with the turnaround. Residents left Schulter's office that night vowing to turn up at City Hall in even greater numbers if the matter came to a vote. Of course, the last thing Mayor Daley or his planning department needs is a storm of protest. If a big crowd showed up to scream and yell over a TIF project, the mainstream press might have to start asking questions about the slush fund that sucked up some $500 million in property taxes last year. The fewer people who know about TIFs, the better.

Well, it didn't take long . . .

Roughly eighth months after Mayor Daley broke his promise not to spend any public money on the 2016 Olympics, he's proposing to spend untold millions buying Michael Reese Hospital so he can tear it down for the Olympic Village.

The mayor didn't tell reporters how he would fund the purchase of the 37-acre site, west of Lake Shore Drive between 26th and 31st streets. But give Crain's columnist Greg Hinz credit -- he figured it out. "The property," Hinz dryly noted in in his Wednesday account of Daley's proposal, "is included within the Bronzeville tax increment financing (TIF) district."

It's also next to the 47th and King TIF, the 40th and State TIF, the 41st and King TIF, the 35th and State TIF, and the 43rd and Cottage Grove TIF. State laws governing TIFs allow the city to "port" TIF funds -- that is, move TIF money from one district to an adjoining one. Including Bronzeville, these TIFS had about $19.3 million in their accounts as of last December.

Remember, TIFs are property tax dollars diverted from the schools and parks and county into slush funds controlled by the mayor. He could use them to rebuild the CTA, hire more teachers, or help offset the city's $196 deficit, which instead has him calling for a $300 million increase in property taxes and fees. Instead, he's pouring money into his pipe dream.

Enjoy the games, my friends. 

In this scene, taped at Monday's budget hearing, we learn a lesson in how to interpret the code words of City Hall.

The speakers are Third Ward alderman Pat Dowell and budget director Bennett Johnson III; the topic is tax increment financing districts.

Dowell used to work in the city's planning department, so she's one of the few aldermen who understands how the TIF program really works.

In this exchange, taped by AlderTrack (props on the new site, guys), she presses Johnson to see whether schools, parks, and taxpayers stand to get anything back for the $700 million (that's Johnson's own figure) they're losing to the city's 156 TIF districts.

Johnson, who's quite smooth, promises to run her questions by the city's lawyers, as though the issue she raises was an intriguing but radical concept in need of investigation. In fact, in the suburbs people have already challenged the legitimacy of pouring money into TIFs while schools and other public necessities go underfunded.

What Johnson's really saying is that he'll have the boys and girls in legal cook up some cockamamie justification for why they can't do what the mayor was never going to let them do in the first place. It's his way of letting Dowell know that her idea isn't going anywhere. As everyone should know by now, the mayor is never going to loosen the reins on his favorite slush fund.

Still, give Dowell credit. She's one of the few aldermen brave enough to link the massive tax hike the mayor's proposed to one of its leading cause: runaway TIFs.

May more follow her lead. 

Back in October, when the Merc and the Board of Trade announced they were merging, I got a call from a source in City Hall, who said, "Just watch, they'll wind up getting TIF cash out of this."

Well, it took longer than we expected, but according to a recent article in Crain's Chicago Business, city officials are proposing to fork over a $40 million TIF handout to CME Group Inc., the combine created when the Chicago Mercantile Exchange bought out the Chicago Board of Trade.

As part of the merger, CME plans to fire over 400 employees so it can reduce expenses, improve productivity, and make even more money for shareholders and top executives as the group consolidates in the board's headquarters at 141 W. Jackson. (A prediction: this deal could well wind up biting property tax payers twice, if the city, as I suspect it will, dishes out TIF money to help the Merc convert its old trading floor at 30 S. Wacker Drive into offices.)

I guess I shouldn't expect the people at the Merc and the Board of Trade to have a conscience about taking city money after firing their employees. If the little guys get kicked in the teeth from time to time, hey, that's just the way things go in our free-market system -- right?

The thing is, TIFs are intended to protect Chicago from the ravages of the free market, stimulating new property taxes for our schools, parks, etc, by subsidizing development in blighted communities.

They're supposed to create jobs, not reward companies for eliminating them. Typically, Mayor Daley measures a TIF's effectiveness by the number of jobs it creates or maintains. For instance, the city recently gave Navteq, the computer-mapping company, a $5 million TIF handout to keep 900 jobs in Chicago. That amounts to $5,555 for every Navteq job retained or created. 

In this case, the city's effectively offering CME $100,000 property tax dollars for every job it eliminates. As one TIF critic at the county put it, "We have officially gone through the looking glass with this one." 

If Mayor Daley ever wants to get out of politics, I think he could have a great career in comedy. Certainly his latest proposal is classic stuff, even if the joke's on us. 

Last week the Metropolitan Mayors Caucus, an organization of 272 area mayors put together by Daley, proposed creating a new wing of the state education bureaucracy intended to guarantee "transparency" in educational fundiing. As Fran Spielman has reported in the Sun-Times, under the proposal, "school districts would develop long-term financial plans that include multiyear forecasts of revenue, spending and debt. Long-term capital improvement plans would also be required." The state would be authorized to withhold funding from school districts that "thumb their noses at the reforms and remove recalcitrant administrators."

Well, what about recalcitrant, thumb-nosing mayors? Make no mistake, the man most responsible for deception in education funding here in Chicago is the very fellow who's proposing to reform it.

I'm talking, of course, about tax increment financing districts, of which Chicago has at least 150 (one more was recommended by the city's Community Development Commission on April 10, the day Daley and the caucus unveiled their proposal).

The really funny part about Daley's so-called reform is that it doesn't even mention TIFs, the single greatest source of duplicity in an already confusing property tax morass. Transparency? What a joke: in Chicago roughly $400 million a year in property taxes is diverted into off-the-books accounts controlled by Daley and his favorite aldermen. The TIF money doesn't appear on any budget, and it's not itemized on your property tax bills, which lie about how your tax dollars get spent. Tax bills lead Chicagoans to believe half of their tax dollars go to the public schools, when in fact the schools forfeit at least $200 million a year to the mayor's worthy causes: e.g., subsidies for luxury condos in Logan Square and commercial leases in the Loop.

Daley had a chance to promote "transparency" last summer, when Cook County Board commissioner Mike Quigley proposed that the county itemize TIF expenditures on tax bills. Mayor Daley dispatched a few aides and aldermen to the county board meeting to make sure the commissioners killed Quigley's bill. In a particularly memorable moment during the debate, "independent" board member Larry Suffredin, echoing comments from one of Daley's chief TIF advisers, said that  putting the information on the tax bill would only confuse taxpayers. 

I suppose it's better just to keep them in the dark.  Or make 'em laugh.

The CTA's falling apart, the CPS is in constant financial crisis, the city's squandering hundreds of millions in TIF funds--and now we've lost a group that made it its business to keep tabs on this sorry mess.

The Neighborhood Capital Budget Group, one of the city's only independent budget watchdogs, is shutting its doors. "We're closing shop on Friday," says Jacqueline Leavy, NCBG's executive director. "Basically, our grant money dried up."

Founded in 1988, the nonprofit NCBG scrutinized city, CTA, and CPS budgets. But perhaps its most significant achievement was the creation of a TIF fact book profiling the 140-plus tax increment financing districts in the city. Monitored only nominally, TIFs function as virtual slush funds for the mayor. The NCBG did its best to take the lid off.

According the Leavy, NCBG's been feeling the budget pinch for the last few years (staff had been cut from ten to two). "Foundations change their priorities," she says. "Some foundations have a rule they will only fund you for two or three or five years. We could not find replacement sources."

The NCBG plans to keep its main Web site and CTA site operating for at least six months. It's planning a farewell party on March 15 at 5 PM at Garfield Park Conservatory.

After a search that seemed never-ending, I've finally found something good to say about the city's controversial tax increment financing program. That's because the city has finally created a TIF district where one's truly needed.

TIFs--created by City Council to divert a portion of property taxes within a defined district into a fund controlled by the city with virtually no oversight--are supposed to be used in blighted communities that would find it difficult to attract development without them. But under Mayor Daley and his planning department, the rules have been bent so that TIFs are routinely employed in some of the hottest neighborhoods--at great expense to local property owners, not to mention the schools, the parks, the libraries, and other entities that their taxes are supposed to fund. (The link above goes to an archive of my articles on the subject.)

But on December 12 the Community Development Commission, the mayorally appointed body that oversees TIFs, created the Harlem Industrial Park TIF. It will attempt to stimulate industrial development and create jobs in the manufacturing area around Harlem and 63rd Street.

According to James Capraro, executive director of the Greater Southwest Development Corp., the area desperately needs help to compete with the southwest suburbs, which are offering tax breaks and subsidies to woo industries and their relatively high-paying jobs out of the city. "If you drive down the Stevenson, you'll see all the new industrial parks outside the city," Capraro testified at Tuesday's CDC hearing. "Keeping these jobs in the city is very strategic and serious."

A promising start, but given the city's abysmal record in enforcing TIFs--like the Pilsen, Fullerton-Milwaukee, and Devon-Sheridan TIFs, just to name a few--I wouldn't be surprised if this one winds up funding something having nothing to do with Harlem Avenue, 63rd Street, or industry. I'll be watching.