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Taming Chicago’s $1.7 billion TIF monster

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Not sure what to think of tax-increment financing? Wonder if it has an impact on your neighborhood? Check these resources on the Web.

The city of Chicago’s TIF portal, newly enriched with detail, includes a map and links to projects inside each district.

Cook County Clerk David Orr has compiled his own reports on the districts. He also has posted an “understanding TIFs” video.

The University of Illinois at Chicago has compiled easy-to-understand background information on TIFs.

The TIF Illumination Project has posted extensive information and critiques. See the “TIF questions” tab to understand some of the issues.

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 TIF whiffs and hits

Mapping it out: TIF whiffs and hits

Updated: October 30, 2013 6:42AM

Tax increment financing is an off-putting name for an explosive political topic.

After coming to Chicago three decades ago as an obscure funding tool for North Loop development, TIF districts have multiplied across the city, raising enough cash to become a stealth government.

Mayor Rahm Emanuel on Sept. 18 pledged $17 million to expand the elite Walter Payton College Prep High School. In May he offered $55 million from TIF to build hotels and a DePaul University-anchored arena near McCormick Place.

In 2012, Chicago property owners paid $457 million into TIFs, nearly a dollar for every $10 that they shipped to taxing agencies. The amount is nearly as much as they paid to support Cook County government and the City Colleges of Chicago combined.

TIFs have been called a slush fund, a description that’s in the eye of the beholder. But they are a mad money pot of off-the-books spending, controlled by the mayor of Chicago based on priorities that can be mysterious.

They are supposed to remediate blight and keep communities from slipping further into trouble. But the richest TIFs historically have been in or near downtown, covering areas seldom thought of as blighted.

Many TIFs across town have achieved their goals. They have produced modernized factory districts, revitalized stores in neighborhoods that retailers had shunned and helped preserve historic buildings. But TIFs also have been used to subsidize private development or businesses that may or may not be credibly threatening to leave.

“The TIF program has gotten so far askew that it has lost its original purpose,” said Rep. Mike Quigley (D-Ill.), who as a Cook County Board member in 2007 produced a study that called for greater TIF accountability.

Nevertheless, Quigley said Emanuel “has made a tremendous amount of headway on transparency.” Earlier this month, the city released new documents for each of its 154 TIF districts that listed expected revenues and expenses through 2017, putting in one place information that was scattered.

TIF incentives are diverted property taxes, making them controversial. Any town can create a TIF district, drawing boundaries as it wants.

Officials compute the amount of property tax revenue that the district generates, and that becomes a baseline sum. Any revenue increase — the increment —from that point goes into the TIF, not to local governments that rely on property taxes.

Mayoral aides said Friday that $1.7 billion sits in the TIF accounts, of which $1.5 billion is committed to projects through 2017. Most of the money, they said, will go to public works or the schools. But the opaque process makes people suspicious. When Emanuel, who has shuttered close to 50 schools, announced TIF funding pledges for school expansion, many wondered how those projects moved to the head of the priority list.

Tom Tresser, organizer of the TIF Illumination Project, which has held workshops for community groups, said schools should be removed from the incentive program. TIFs, after all, are supposed to increase property valuations, one measure of neighborhood prosperity, yet schools are tax exempt.

Others argue that would only force the cost of public works onto other accounts that are strapped for cash.

Laurence Msall, president of the Civic Federation, said TIFs have done significant good but would benefit from long-term planning by the city and clearly stated goals. Chicago, he said, must develop a multiyear capital budget with City Council input that shows where the money is being drawn, whether it’s TIF or something else.

Msall also noted that TIFs are widely misunderstood and that the large sums they’ve generated have made them easy targets.

Perhaps people can’t be blamed for misunderstanding. Property owners who pay into TIFs don’t see such a line item on their tax bills. But Cook County Clerk David Orr, whose office computes property tax rates, said TIFs will show up on property tax bills due to be mailed next summer.


Twitter: @RoederDavid

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