Tax Increment Financing (or “TIF”) is the favorite target of many commentators and aspiring politicians. TIFs, they argue, deprive our schools of desperately needed money and line the pockets of politically connected downtown developers. Empty out the TIF accounts, they proclaim, and all our budgetary woes would be solved.
Crain’s Chicago Business columnist, Greg Hinz,who got his start in Rogers Park as a reporter for the old Lerner News Star, just wrote an excellent piece on TIFs that debunks those myths and sets the record straight on TIFs.
It’s must reading for anyone who wants a clear understanding of how TIFs operate and a reality check for those who see TIFs as some evil enterprise or view them as a panacea for solving our fiscal crisis.
Below is a link to the article. I’m also reprinting the article in full:
The demagogues are wrong about TIFs
By Greg Hinz,
In what passes for reasoned political debate nowadays, tax-increment financing, better known as TIF, has become the whipping boy for Chicago pols on the make.
If not for TIF, they argue, the public schools would have another $400 million a year for kids. And dontcha know? If not for TIF, needy neighborhoods would be prospering, and fat downtown businesses wouldn’t be getting almost all of that $400 million-a good portion of which, they claim, is promptly kicked back to Mayor Rahm Emanuel’s campaign fund.
I’m sorry to disappoint the demagogues, but virtually all of that is wrong. Flat wrong. Not even close.
The TIF program has been abused and some money misspent, mostly under former Mayor Richard M. Daley but some on Emanuel’s watch, too. It’s also done a lot of good. But the most obvious thing TIF has done is produce reams and reams of misinformation and bad reporting, thanks to some of my colleagues in the fourth estate.
Let’s set the record straight:
When a TIF district is formed, property taxes for schools, the county, the city and the like are frozen within its boundaries at the existing level. Any future growth for up to 23 years goes not to them but to TIF projects.
That, however, doesn’t mean Chicago Public Schools gets cheated of even a penny. CPS levies on all of the other taxpayers the property taxes it doesn’t get from TIF districts. And since CPS already is asking for the maximum amount of money it can under state law, “CPS wouldn’t get any more if every TIF district in the city was abolished tomorrow,” Chicago-based Civic Federation President Laurence Msall says. “They’re already at the levy limit.”
Well, what about how the money is spent?
The city’s combined TIF districts took in $422 million in fiscal 2013, the latest figures available, according to Cook County Clerk David Orr. City Hall takes $10 million off the top for administration. Another $50 million or so a year goes to pay debt service on past borrowing for TIF projects. What happens to the rest?
Since he took office, Emanuel has approved $1.3 billion in TIF projects (Click here to see the list). The biggest discrete chunk, $303.8 million, went for local street resurfacing, reconstruction and streetscaping in every ward in the city. Just over $155 million went for new or rebuilt Chicago Transit Authority stations, $54 million for school projects, $39 million for bridge reconstruction and $76 million for residential projects, mostly low-income and senior housing that otherwise would not be built. Smaller amounts went to a host of things like sewer work and job training.
Private development-those subsidies to “fat businesses”-got $234 million, about 20 percent of the total. But half of that went to projects in the neighborhoods. Such as the modernization of Mount Sinai Hospital, the key critical care institution for much of the South Side, which got $31 million in TIF grants. Or $22.5 million to keep the Finkl steel company and its hundreds of union jobs in Stony Island/Burnside. Or $12 million to rebuild the Englewood Mall.
And downtown, defined as Ashland Avenue east to the lake, between North Avenue and Cermak Road? It got $110 million for private projects-half for a new hotel near McCormick Place that is right on the edge of “downtown” and will employ hundreds of high school graduates at good wages. Exclude that project and the downtown total amounts to less than 5 percent of the $1.3 billion.
As city Planning Commissioner Andrew Mooney puts it, “Particularly in this administration, TIF has gone to neighborhood infrastructure projects.”
Now, maybe the neighborhoods didn’t need the money and it instead should go to, say, teacher pay hikes instead of a new Green Line el stop at Morgan Street, renovating the Logan Theater, rebuilding the Bryn Mawr Red Line stop or luring federal cash to the University of Illinois’ new digital manufacturing lab. Let’s have that debate.
But enough of this whining about how TIF is just another form of welfare for rich people in high-rises. It just ain’t so.