Mayor Richard Daley has produced a glowing report on the city’s use of tax increment financing, or TIF. It explains what TIF districts are, how important they’ve become in light of diminished federal aid to cities and, importantly, how much private investment has been drawn to Chicago’s 40-plus TIF districts over the past 15 years (more than $1.7 billion, fetched by $272 million in TIF pump-priming, for a private/public “leverage” exceeding six-to-one).
Pretty impressive, except for one thing: Nothing in Daley’s report addresses–or even acknowledges–the very real problems with the city’s TIF program. Not that he’s the first politician to order a consultant’s report explaining what’s right about a criticized program. It’s just that Daley and his commissioner of planning, Christopher Hill, are blowing an opportunity to reform Chicago’s program before the Illinois General Assembly jumps in with statewide changes that could tie the city’s hands.
The problems with Chicago TIFs are not so different than those reported elsewhere in Illinois, just larger in scale: The definition of what constitutes a “blighted” area eligible for TIF is unduly subjective; the local schools, which end up forgoing most of the property tax monies diverted to TIF projects, have virtually no say in the matter; a local TIF review board composed of delegates from the schools and other tax-forgoing governmental units meets rarely and is poorly attended; the city’s TIF redevelopment plans, especially for downtown, are so vague as to be non-existent, giving the administration carte blanche to bestow subsidies on some developers but not others. (In Chicago, developers seem to fare better after hiring the mayor’s brother’s law firm.)
Instead of hiring an urban consulting firm to extol the merits of the existing program, Daley should be developing self-imposed reforms that can be recommended to the state legislature for all Illinois municipalities. By taking a “We’re alright, Jack” approach, the mayor all but invites Sen. Christine Rodogno (R-LaGrange,) head of the state senate’s TIF reform panel, to rewrite the state’s enabling act in ways unfavorable to cities (such as giving schools and other taxing districts veto power over TIF formation).
TIF financing, which allows cities to divert property taxes paid by new developments to pay for subsidies that support those developments, has proven an invaluable tool for Chicago and other Illinois communities. It has also been, on occasion, abused, misused and run like a slush fund.
Reforms are coming. The city can either shape them. . .or deny there’s a problem and get blind-sided.
