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Rahm Emanuel embraces reform of special TIF taxing districts

Mayor Rahm Emanuel MelindKelly Executive Director Chatham Business Associatimember TIF Task Force walk away from mediafter talking about report from

Mayor Rahm Emanuel and Melinda Kelly, Executive Director, Chatham Business Association and a member of the TIF Task Force, walk away from the media after talking about a report from the Tax Increment Financing (TIF) Reform Task Force, and calls for reforms, at the Hairpin Lofts and the Logan Square Community Arts Center 2800 north Milwaukee. Monday, August 29, 2011 | Brian Jackson~Sun-Times

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Updated: November 4, 2011 5:29PM

Chicago is likely to fold some of its 165 tax-increment-financing (TIF) districts and subsidize fewer private developers, thanks to an overhaul embraced by Mayor Rahm Emanuel Monday to establish public trust in a much-maligned program.

A panel of experts chaired by municipal finance expert Carole Brown is recommending that City Hall develop a multi-year economic development plan to guide future TIF investments and reject projects that fail to promote those goals.

Instead of evaluating TIFs every decade, City Hall was advised to review them every five years and coordinate investments with a multi-year capital plan that, until now, has been little more than a wish-list.

Instead of doling out lucrative subsidies to clout-heavy developers, Emanuel was advised to appoint a new internal governing body to establish rigid job creation and performance standards and police under-performing developers.

“That action can be close the district, amend the redevelopment plan, revise spending strategy, but take some kind of action,” said Brown, the former CTA board chairwoman.

Civic Federation President Laurence Msall, a member of the TIF reform task force, flatly predicted that the reforms would result in fewer TIFs.

“There are plenty of TIF districts out there that are going to fall under the five-year review that are going to have a hard time justifying that they’re having the impact they were intended to,” Msall said.

“And then, the city can make the decision by closing down those projects or closing down those districts because the funds are better spent in higher-priority areas.”

Without mentioning former Mayor Richard M. Daley by name, Emanuel ridiculed his predecessor’s oft-repeated claim that TIFs are the only job-creating tool at a mayor’s disposal.

“The instrument of TIF is an important tool, but it is one tool in a tool box. For too long, it was debated as it was the tool box and the only thing in the tool box,” the mayor told a news conference at a TIF-funded project in Logan Square.

“The truth is, everything we do is about growing our economy. .... What we do in our City Colleges and how we reform them, what we do at our public schools, where we invest our resources in our critical infrastructure, what the budget will ... invest in.”

Currently, Chicago has 165 TIF districts — literally covering 30 percent of the city — with an unallocated balance of $868 million. Together, the districts are expected to collect $463 million this year.

When TIF’s are created, property taxes within the boundaries of the district are frozen at existing levels for 23 years. Revenue growth is put into a special fund for infrastructure repairs, developer subsidies and other public improvements.

Over the last 22 years, Daley became increasingly reliant on TIF’s. He gave TIF subsidies to clout-heavy developers and used TIF money to erase cost overruns at Millennium Park. He used TIF subsidies to lure United Airlines to the Willis Tower and gave $15 million to the Board of Trade. He even used the money to build schools, libraries, police and fire stations.

Under pressure from aldermen, Daley agreed last year to siphon $180 million in surplus TIF funds to balance his final budget and help the Chicago Public Schools do the same.

Emanuel has flatly rejected that strategy in favor of a $150 million school property tax hike.

“Those are, in my view, one-time fixes that don’t deal with the structural problem. My mission is to have an honest budget for the public — not one that papers over mistakes or structural problems and avoid you from dealing with reforms that are necessary,” the mayor said Monday.

In addition to establishing TIF performance standards and posting those “dashboards” and redevelopment agreements on the internet, the report recommends other changes to “greatly expand the impact of TIF funding.”

Instead of offering only grants to designated developers, the panel recommends that the city offer low-interest loans while making certain repayment and interest is applied “only to TIF purposes.”

The 100-page report further recommends that City Hall: pool the increment from “multiple TIF districts” to support programs with “city-wide benefits” such as affordable housing or eradicating food deserts; use TIF money to eliminate vacant land and buildings, create a venture capital fund and consolidate TIF districts to make them easier to manage.

In the ten-year period ending in 2010, the city spent $3 billion in TIF funds. Projects undertaken by private developers got $637.6 million. The Chicago Public Schools got $548 million while $98.7 million bankrolled CTA station and track improvements and $72.7 million went to the Chicago Park District.

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