CivicLab research alleges TIF surplus in 11th and 12th Wards
July 4, 2013

By Lisa R. Jenkins

Research conducted by the nonprofit group CivicLab indicates that, at the end of 2011 (the last year for which figures are available), the 11th Ward had $57.4 million in tax increment financing money available and the 12th Ward had $9 million available.

CivicLab held a Town Hall meeting June 5 at the McKinley Park Library at 1915 W. 35th Street to offer TIF transparency to residents of the two wards who may be concerned about how officials are using their property tax dollars.

TIF districts make up about 57% of the 11th Ward and 47% of the 12th Ward.

Tom Tresser, co-founder of CivicLab, told how TIFs affect Chicago district by district. “We understand that TIFs extract property taxes from the ward and also return them to the ward in the form of projects including public buildings and structural improvements and grants,” he said. “Some funds return to the ward as awards to private developers and businesses. We are dedicated to building, distributing, and encouraging the use of new tools for civic engagement and government accountability.”

The 11th and 12th wards contain ten TIF districts. The 11th Ward comprises Bridgeport, McKinley Park, Armour Square, Pilsen, Back of the Yards, the Stockyards area, Oakland, and Fuller Park. The 12th Ward comprises McKinley Park, Bridgeport, Little Village, and Brighton Park. TIF district boundaries wander across city wards and other political lines, so it is not uncommon for one neighborhood to be part of two TIF districts.

When officials create a TIF district, they tally all property taxes generated within that district during that year, which becomes the district’s base equalized assessed valuation amount. After that, whenever government increases property taxes, any amount of money exceeding that base amount goes into the TIF district account. As property values increase, all property tax growth above that base amount can be used to fund redevelopment projects within the district. The increase, or increment, can be used to pay back bonds issued to cover upfront costs or can be used on a pay-as you-go basis for individual projects.

At the end of 23 years—the life of a TIF—the revenue increase exceeding the base amount gets distributed annually among the seven taxing bodies in the city that base taxes on property values.

Chicago’s TIF program, created by the late Mayor Harold Washington in the 1980s and expanded by former Mayor Richard M. Daley, provides subsidies and public resources to private businesses to help construct projects and developments in allegedly blighted or under-served areas.

Today, 443 TIF districts exist across Chicago (163) and suburban Cook County (280). The Chicago TIF money, Tresser noted, goes into “what is essentially a second City budget.”

With much money sitting in TIFs allegedly not being spent on neighborhood projects, some meeting attendees wondered why officials do not use the money to get the City out of its deficit, improve neighborhoods, and create jobs.

In 2011, $1.7 billion sat in the collective bank accounts of Chicago’s 163 TIF districts, with $13.3 million in TIF money raised from the 11th Ward in 2011 alone and $2.7 million from the 12th Ward in that same year, according to CivicLab. “If the City says it’s broke, what about this money that is just sitting there?” Tresser asked.

In the 11th Ward, 8% of TIF dollars went to public projects, while 92% went to private projects, according to Tresser. In the 12th Ward, approximately 42% went to private projects, 57% to public projects and 0.4% to a non-profit. So, according to these CivicLab figures, TIF money predominantly goes to subsidize private projects.

In both wards, entities such as manufacturers and property developers have received tens of millions of TIF dollars. TIF-funded projects in the 12th Ward have included $5.3 million to create the McKinley Park Target store and $4.4 million for National Wine and Spirits, an Indianapolis-based company with an address at a Brighton Park warehouse, according to CivicLab.

Both a spokersperson for the 11th Ward office of Alderman James Balcer and a City spokeperson said that the numbers provided by CivicLab were not accurate, and that about 50% of TIF money was for public projects in that ward. Peter Strazzabosco, deputy commissioner, Department of Housing and Economic Development, said approved expenditures for the 11th Ward totaled about “$22.5 million for public projects and $25 million for private projects.”

No comment was available from the 12th Ward office. Strazzabosco also said the City is working on making the information regarding private and public projects using TIF funds easier to find on the Internet.

To learn more about how TIFs operate in Chicago, log on to www.cityofchicago.org/city/en/depts/dcd/provdrs/tif.html. For more information about CivicLab, log on to www.civiclab.us, call (773) 770-5714, or email tom@civiclab.us.