Emanuel vows to strip ‘politics’ from tax increment financing
BY FRAN SPIELMAN City Hall Reporter email@example.com May 19, 2011 1:46PM
Mayor Rahm Emanuel
Updated: August 28, 2011 12:22AM
Tax Increment financing should be used to create jobs in “blighted communities”— not to reward downtown developers, Mayor Rahm Emanuel said Thursday, vowing to take the “politics out of” former Mayor Richard M. Daley’s favorite economic development tool.
Emanuel has asked former CTA Board Chair and municipal finance expert Carole Brown to lead a panel of experts who will spend the next three months establishing “return-on-investment and performance goals” for every TIF district and project.
Without criticizing Daley directly, Emanuel said he was “shocked” to learn that TIF districts have been multiplying for more than two decades without any job creation standards.
“With that standard, we’re taking politics out of it and putting job growth and economic activity at the center,” Emanuel told reporters at The Green Exchange, 2545 W. Diversey, which he cited as a proper use of TIF subsidies.
“TIFs are an affirmative instrument in creating neighborhood economic growth. … Over the years, it’s mutated. It’s become maligned. It’s been attacked as a political instrument. I want it to be about what it should be. Return it to its roots. … It is for blighted economic communities. It’s not for downtown or high-rent areas.”
The last round of year-end city audits showed that Chicago had 159 TIF districts that cover nearly one-third of the city with a collective balance of $1.2 billion.
When TIF districts 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 districts. 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. But he refused to shine the light on TIFs by including those funds in the city’s overall budget.
On Thursday, Emanuel embraced that reform. In the meantime, he’s lifting, what he called the “curtain of secrecy” and cynicism surrounding TIF spending by creating a website specifically for that purpose, cityofchicago.org/TIF.
The new mayor said he won’t know until the standards are established whether he would close out current TIFs and projects that don’t measure up — or give them time to meet the standard.
And just because he’s planning to rein in TIF spending doesn’t mean he’s planning to cut off the spigot for construction of the public buildings Daley liked to call “neighborhood anchors.”
“This is not [to say], no to schools, no to libraries and no to police stations. It doesn’t say any of that. …To say that schools are not part of economic development — there’s a world of history and data to prove … otherwise,” he said.