Three firms to refund $34 million in TIF subsidies
BY FRAN SPIELMAN City Hall Reporter firstname.lastname@example.org January 30, 2012 2:22PM
Mayor Rahm Emanuel (with Alderman Joe Moreno) announced a new set of TIF reforms at St. Elizabeth Hospital, Monday, January 30, 2012. | John H. White~Chicago Sun-Times.
Updated: March 1, 2012 9:45AM
Chicago taxpayers are getting a $34 million return from three companies awarded tax-increment-financing (TIF) subsidies — two of which fell short of their job promises — underscoring Mayor Rahm Emanuel’s commitment to rein in TIF spending.
The largest break — $15 million — comes from CME Group, which was granted a TIF subsidy but is taking a pass because it no longer needs the help after settling its tax issues with the state.
The subsidy was authorized and budgeted but not yet given to CME.
Another $13 million will come from the CNA group. The insurance giant got a $13.7 million subsidy in December 2008 to renovate its 333 S. Wabash headquarters, but used the money to renovate and lease space it no longer needed after a corporate restructuring.
The redevelopment agreement required CNA to maintain at least 2,700 employees at the site through 2018, but fell short of the requirement for all of 2010. The funds will go to local taxing districts now that the Central Loop TIF has expired.
The third refund — nearly $5.4 million — will come from Bank of America, which took over a TIF redevelopment agreement for 540 W. Madison from ABN Amro and was required to honor ABN’s job promises.
After reporting the required 2,739 jobs in 2009, Bank of America subsequently “self-reported” that it had “overstated the job number” by including the jobs of DRW, an on-site consultant.
Bank of America was required to return the 2009 payment with interest and wrote a check for $5.4 million on Nov. 1, 2011. The funds were returned to the River West TIF.
The surprise refunds were disclosed on the same day that Emanuel moved to rein in TIF spending and hold future developers accountable.
For the first time, the city will hire independent auditors to randomly evaluate whether developers are honoring the lofty job promises they make in exchange for city subsidies. Those who fall short will face “enforcement,” the mayor said.
An internal governing body formed to establish specific job creation standards and police under-performing developers will be broadened to include Chief Financial Officer Lois Scott, Chief Operating Officer Lisa Schrader and City Comptroller Amer Ahmad.
To lift the veil of secrecy surrounding TIF spending, City Hall will create an online database that tracks all subsidized projects in one place, complete with a “dashboard” to track performance. Every TIF-funded project will have its own “assessment report.”
“That’s what has been missing in the past and will now be available. ... It’s a new day and a new regime around TIF’s that had not existed before,” Emanuel told a news conference Monday at St. Elizabeth’s Hospital in Wicker Park, site of a new Resurrection University nursing center financed by a $4.7 million TIF subsidy.
“It will give the public the confidence that, when the city, in the name of the taxpayers, steps forward, there are standards, there’s accountability, there’s ways to measure and there’s enforcement.”
The mayor’s reforms jumped the gun on a report by the Illinois chapter of the Public Interest Research Group that urges City Hall to go further to rein in Chicago’s 163 TIF districts that literally cover one-third of the city.
Specifically, the organization wants the mayor to: close TIF districts once projects are completed; stop accumulating large amounts of revenue in TIF accounts and, instead, return those surpluses to the “general property tax pool;” include TIF spending in the overall city budget and stop using TIF as a “substitute for capital budgeting,” particularly when it comes to building schools and parks.
“We want TIF’s to be targeted and temporary. Once a TIF district or project hits their goals, they ought to be shut down. We want to make sure there is strong language written into the contracts that says that if a developer doesn’t deliver on our goals, we get our money back as taxpayers,” said Celeste Meiffren, the organization’s field director.