City’s $1.4 billion in TIF accounts draws concern of CivicLab, local communities
October 5, 2018

Tom Tresser of CivicLab and the TIF Illumination Project appears frequently in communities and the media explaining TIF abuse.

By Madeline Makoul

With more than $1.4 billion sitting in the City’s TIF (tax increment financing) accounts, community groups across Chicago are questioning these stockpiled funds, asking officials to offer more transparency and dedicate funds to areas that need them most.

CivicLab and the TIF Illumination Project recently announced their analysis reveals $1,439,903,731 is sitting in TIF accounts. This money comes from property taxes collected in 145 districts, and leaders originally intended it would help development and construction in blighted areas in hopes of spurring economic development, said Tom Tresser, co-founder of CivicLab. As community advocates explained, however, this process has not gone according to plan, with TIF money often going to development in affluent areas of Chicago.

“TIFs are really a big part of this tale of two cities that we have been seeing in the City for a long time—one that is taking resources away from neighborhoods, especially black and brown communities, and moving that to developers for things like luxury condos and stadiums,” Nathan Ryan, director of communications at Grassroots Collaborative, said. “It’s actually hurting the quality of life of the folks in our communities.”

Collecting almost $500 million a year, TIFs have the potential to change the communities that need it most, yet officials do not allocate them in a way that benefits the areas they were designed to help, Ryan said. In light of TIFs’ continued misuse and lack of transparency, multiple community organizations across Chicago are asking for change.

Call for transparency

So where is the $1.4 billion going? According to Tresser, when he asked the City’s Department of Planning and Development and the Office of Budget and Management, representatives told him many funds are “committed” to projects. At the same time, he learned some of these committed funds are “confidential and under discussion.” As Tresser explained, money cannot be both committed and still under discussion, calling into question these funds’ exact status.

According to a statement from Kristin Cabanban, a public relations and communications spokesperson for the City of Chicago, 90% of TIF funds “were committed or have been committed to neighborhood projects.” Cabanban said the high amount of money in TIF accounts stems from the need for “significant investments upfront” with large projects that require the balance to build up over time.

Advocates like Tresser remain unconvinced.

“The TIFs are just a giant slush fund covering a lot of things that have nothing to do with blighted communities or economic development,” he said. “It’s a very fudgeable, elastic fund that responds to the mayor and his allies at their whim.”

Mayoral candidate Troy LaRaviere expressed similar concerns over TIF secrecy. With TIF accounts pulling in close to half a billion in residents’ tax dollars a year, LaRaviere wants these accounts fully transparent and open to the public.

‘Sunshine of public scrutiny’

“They have to be in the sunshine of public scrutiny,” LaRaviere said. “Right now, it’s an extremely corrupt and shady process—it’s ripe with corruption. We are in desperate need of revenue, and apparently it’s a source of almost half a billion in revenue each year.”

Ryan, too, questioned how lawmakers are using this money. Despite being set up to help blighted communities, Ryan pointed to how this broken system only increases communities’ struggles. He mentioned a report by David Orr, Cook County Clerk, that found one third of Chicago’s property tax dollars—about $660 million—are diverted into TIF funds. Yet, as taxes continue to rise, school systems face mounting challenges and mental health centers are closing, bringing Ryan and other advocates to question who really benefits from TIFs.

Ryan said TIF projects primarily benefit elites, and the gains for this privileged group go beyond the luxury highrises that are popping up throughout the Loop with the help of TIF dollars. While TIFs present the idea of development projects promoting jobs, Ryan said Grassroots Collaborative did a report that found the jobs generated by TIFs primarily go to college educated whites living in suburbs—not to those living in communities TIFs are designed to improve.

“If you look at a map of where the TIFs are and where the money is, you can clearly see the inequality of the TIF system,” Ryan said. “It’s certainly not bringing investment and resources to Englewood as much as it is to the affluent Near North Side.”

Cabanban countered that Mayor Rahm Emanuel reviews TIF balances annually, “identifying surplus that can be returned to taxing districts.” She asserted that officials have returned $1 billion of TIF surplus to the Cook County Clerk since 2011.

Propositions for the future

While advocates may not agree on what should happen to TIFs moving forward, they do agree the program need a major change.

Tresser called for a complete freeze of TIF accounts, also stating he wants them eliminated eventually.

“They aren’t serving their original purpose,” he said. “I do think that Chicago needs economic development in poor communities, so let’s have a master plan that is equitable and shared by everyone. We need a different plan.”

Tresser thinks officials could allocate the $1.4 billion to make massive changes including expanding public transportation, reopening closed schools, increasing teachers’ salaries, and building up community centers and clinics.

While Ryan and LaRaviere agree more money needs to go to the South and West sides, they do not agree about eliminating TIFs. LaRaviere said TIFs must undergo a “radical” reform. With an upcoming election and new candidates in office, change may be right on the horizon.

If elected mayor, LaRaviere hopes to make the TIF system entirely transparent and will push to use funds equitably.

“When I say equitable, I don’t mean everyone is the same,” he said. “I mean the areas that need the most, get the most. What we have right now is the opposite—the areas that need it the least get the most, and the areas that need it most get the least. This is for the benefit of our entire city. If we invest in underdeveloped areas, that helps our city. When all of Chicago prospers, all of Chicago prospers!”

To learn more about tax increment financing, visit the TIF Illumination Project’s website at www.tifreports.com. For Grassroots Collaborative, log on to grassrootscollaborative.org. For the City’s TIF website, log on to https://www.cityofchicago.org/city/en/depts/dcd/provdrs/tif.html.