In a TIF: Chicagoans angry about obscure funding method

By Meredith Wilson

Thanks to this year’s elections, Chicagoans looking for an explanation for the city’s financial woes are turning an eye towards an opaque form of municipal funding.

TIF, or tax increment financing, has been vaulted into public consciousness as the city struggles to elect a mayor and find a solution to Chicago’s rising debt and underfunded pensions, which threaten to sink the city financially.

“Political football”

“There were some high-profile incidents of disinvestment, and TIF became a political football. People want a silver bullet, or a smoking gun, as to why things are bad. TIF kind of gave them a focus for that anger,” said Rachel Weber, an associate professor of urban planning and policy at the University of Illinois at Chicago.

During the elections, many aldermanic candidates ran on TIF reform. The issue came up in the first runoff debate between Jesus “Chuy” Garcia and Mayor Rahm Emanuel, when Garcia used TIF distribution to accuse Emanuel of cronyism.

“Chicagoans need to know that this mayor has given corporate welfare to his cronies, millionaires and billionaires in Illinois in terms of tax increment financing,” Garcia argued, without presenting specifics.

Greg Hinz, political columnist at Crain’s Chicago Business, believes that people started caring about TIF because of the political rhetoric, not because of facts.

“There clearly have been abuses in the past,” Hinz said during a phone interview. “This urban myth has developed that says grants are going to rich corporations, and that narrative plays really nicely into this 1 percent 99 percent that’s part of this mayoral race, and the facts get lost.”

Hinz’s wrote on March 16 that of the $1.3 billion in TIF funding Emanuel has approved, it was split almost evenly between public and private developers, and that of the private developments that received TIF funding, 20 percent were neighborhood improvement projects.

Residents in awe

Asiaha Butler, president of the Resident Association of Greater Englewood, and her team pushed for a ballot initiative during the February elections asking whether residents of the 30th precinct in the 16th ward wanted to form a TIF advisory council.

The Englewood TIF district generated over $5 million in 2013 and had over $20 million in the coffers at the end of 2009, according to reports by the Cook County Clerk’s office.

After all the ballots were counted, 86 percent of voters said they wanted more say in how their TIF funding was spent.

Butler said that residents were mostly unaware of TIF funding, but when they found out what was going on, they were shocked.

“People were like ‘are you serious? Is this the truth?’ People are just in total awe. There’s this tool that can help with the community that isn’t being managed properly.’” Butler said. “

The city of Chicago’s website describes TIF as “a special funding tool used by the City of Chicago to promote public and private investment across the city.”

What is a TIF?

To qualify for TIF district status, an area must be considered “blighted” by the government. Age, dilapidation, excessive vacancies or a lack of community planning would cause an area to be “blighted.” The area must also meet the “but for” rule, which says that a district wouldn’t be able to develop “but for” TIF funding.

A TIF district lasts for at least 23 years. When it is formed, the area is assessed and given a baseline property value. Anything residents pay in property taxes above that value goes into the district’s TIF fund. That money is then used to fund directly or repay loans taken out for building, redevelopment and maintenance projects within the district.

As of 2013, there were 151 TIF districts in Chicago, covering 30 percent of the city. According to a report by the Cook County Clerk’s office, $422 million in TIF money was collected in 2013, and $5.9 billion has been collected since 1986.

People want answers

In a push to educate Chicagoans, the Civic Lab began a TIF Illumination Project in February, 2013, to “explain and expose how this program works and who is helped and harmed by it.” The Civic Lab employs researched reports, graphics, video and, most effectively, community organizing in its education push.

According to Civic Lab co-founder Tom Tressor, the organization has presented to over 4,000 people since it launched the project. Over 230 attended the first TIF town hall. To date, town halls have been held in 136 TIF districts. All the meetings were organized by members of the community who wanted to know more about TIF funding.

“There’s a backdrop of ‘we’re broke we’re broke’ but we can still shower projects with tax dollars,” Tressor said. “It’s a pretty raw nerve. And when you explain it that way, people want to know why.”

He called the current economic climate a “perfect storm” of school closures, financial hardship and the rise of the 99 percent movement.

“It’s your property dollars, it’s the most basic connection between you and your government,” Tressor said. “It’s not some strange grants or far-away federal funds. This is the way your city operates.”

Asiaha Butler plans to continue her education campaign in Englewood and push for a TIF advisory council with the next 16th ward alderman.

“We can’t really get angry if we don’t know enough. How do we learn more?” Butler said. “Residents weren’t like ‘Hey! We need to do something about this!’ There’s a lot of interest in discussion, more interest in learning more.”

Photo at top: The Quincy Station in the Chicago Loop has been allotted $15.7 million in TIF funding for station improvements. (Merideth Wilson/Medill)