New investigations into Chicago's controversial TIF (Tax Increment Financing) program shows that the money mostly did not go to helping development in "blighted" areas, but instead went to some of the city's largest corporate giants and with no public accountability. The TIF program, which was tightly controlled by Mayor Richard M. Daley, siphoned hundreds of millions of dollars that would have gone to the schools and put it into TIF funds that were under the mayor's control. He then doled them out at his discretion.
United Airlines pilots picketed UAL headquarters at 77 W. Wacker Drive in Chicago (above) on St. Patrick's Day (March 17) 2010 after United entered into an agreement with Irish Aer Lingus to fly the airlines' routes to Ireland using non-union pilots. The TIF money that went to United helped with the stunning building in downtown Chicago (hardly a blighted corner, at Wacker and Dearborn above) and failed to provide the promised jobs for Chicago.
At the same time, Mayor Daley had his appointed schools chiefs (Arne Duncan and Ron Huberman during the height of the TIFs; now Terry Mazany) claiming that the school system had huge "deficits" (and, among other things, had to cut back on payments into the Chicago Teachers Pension Fund) and had to make draconian cuts. To take just one example, the elimination of more than 1,300 teachers and additional non-teachers during the summer of 2010 would have been completely unnecessary had the TIF dollars been available to the public schools, thereby forcing the Board to stop claiming it has the "deficit" it claimed. On June 15, 2010, the Board set the stage for the massive layoffs by declaring a "fiscal emergency" based on Huberman's "deficit" claims.
How is this for a stunner: "Of the $1.2 billion [TIF dollars] designated for private sector projects since 2000, nearly half was earmarked for some of the area’s most profitable corporations. City officials approved financing for Quaker Oats, CareerBuilder, UPS, Target and Jewel-Osco, among others," according to a recent investigation by reporters from the Columbia College journalism program in Chicago (see below).
The TIF program was designed to eradicate blight, add jobs and spur economic growth. It supports public and private sector projects including infrastructure, parks, schools and corporate subsidies. Of the $1.2 billion designated for private sector projects since 2000, nearly half was earmarked for some of the area’s most profitable corporations. City officials approved financing for Quaker Oats, CareerBuilder, UPS, Target and Jewel-Osco, among others.
More than half of the city’s 171 TIF projects are clustered in or near the Loop. Money was also given to cultural institutions, some in the downtown area.
Many critics question whether the program should be used to benefit nonprofits like the Chicago Symphony Orchestra, which received $2.5 million. TIF money also went to market-rate housing developments, including downtown condominium buildings.
Corporate Giants Received TIF Money, Records Show http://www.nytimes.com/...
United Airlines Headquarters at 77 W. Wacker Drive in Chicago Tuesday Feb. 22, 2011. About a dozen companies were awarded nearly $100 million in all to move their corporate offices to Chicago or remain in the city between 2000 and 2010. United Airlines won approval for two TIF subsidies totaling about $31 million. John Konstantaras/Chicago News Cooperative
Now that the word's out about how TIFs suck money away from the schools, parents are rallying to raid the kitty you need to understand how the program works. The amount people pay in property taxes is determined in part by the assessed value of their property. After the City Council, at Mayor Daley's urging, creates a TIF district, it basically freezes the level of property tax revenue that the schools, the parks, the county, and all the other taxing bodies can divvy up from that district for up to 24 years. If property in a TIF district increases in value during that time, the extra tax revenue goes into a special account controlled largely by Mayor Daley. The schools, which count on property taxes to fund 37 percent of their budget, see none of it. So when they need more money, they have to raise their tax rate—or make cuts, or ask the state for more help, or all of the above. Last year about $250 million that without TIF would have gone to the schools was diverted into TIF accounts.
The Armies Are Gathering
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Rachel Weber, an associate professor of urban planning and policy at the University of Illinois at Chicago, said TIF money should not be given to companies to shift jobs from one place to another within a metropolitan area. The subsidizing of corporate headquarters in the Loop is “one of the more egregious uses of TIFs,” Ms. Weber said.
An analysis of each project approved from Jan. 1, 2000, to July 30, 2010, found that nearly $600 million in TIF money was earmarked for companies. Nearly $100 million of that went to about a dozen companies as an inducement to move their corporate offices to Chicago or to remain in the city.
United Airlines, for example, was allotted about $31 million in TIF money. Mike Trevino, an airline spokesman, said the company was expected to employ more than 3,100 people in Chicago because of the subsidies. Mr. Trevino acknowledged that about 600 of those jobs were transferred from Elk Grove Village.
Some TIF money — nearly $200 million — has been approved for nonprofits, including the Spertus Institute of Jewish Studies and Rush University Medical Center, which will receive $75 million. TIF critics and officials in other cities said it was rare for nonprofits to receive this type of financing.
Corporate Giants Received TIF Money, Records Show
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You are actually subsidizing job loss, Baiman said.
The idea of TIF money helping blighted areas – the reason behind tax-increment financing districts in the first place – was abandoned years ago in Chicago, Baiman said.
They use that rationale that TIF is a mechanism to spur economic growth in blighted areas. As everyone knows, it is basically been applied all over the place and not in particularly blighted areas, Baiman said.
TIF Subsidies Given to Chicago Companies, Nonprofits Bypass City Neighborhoods in Need of Jobs
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This story was reported by Caitlin Bukowski, Ellyn Fortino, K. Herron, Becca James, Meghan Keyes, Tony Merevick, Margaret Smith, Taryn S. Smith and Mika Tatich. Dan Weissmann assisted with data analysis. Derek Eder created the searchable map.
"Finally, after years of having TIFs rob Chicago’s school system of $250 million each and every year, the Mayor has taken two out of the seven steps needed to right this decades-long wrong," said Joseph McDermott, Municipal Outreach Coordinator, Chicago Teachers Union, alluding to the fact that the TIF surplus has been estimated at $700 million, and yet Mayor Daley proposes releasing under $200 million. “Those lining up to vie for the mayor’s position here in Chicago should expect teachers, parents and students to demand that schools and all social services be excluded from TIFs in the future. That will be a campaign promise we will demand … and track.”
Housing developments received $340 million in subsidies, while $200 million went to non-profits, hospitals, and cultural institutions like the Chicago Symphony Orchestra. Many of these non-profits have enormous philanthropic bases. Numerous hospitals in Illinois are under scrutiny as to whether they ought to remain tax-exempt. Some housing developers used TIF money to create luxury condos. Other TIF deals have actually been documented to create blight.
Chicago has yet to implement its 2009 sunshine law and shed light on how taxpayer money is spent. The 2009 law required the city to put online searchable copies of every redevelopment agreement since 2004. Many were not posted and journalists at Columbia College had to undergo arduous Freedom of Information Act Requests to collect the information. The efforts of the students have both provided a useful analysis of the troubled TIF program as well as a valuable public data resource.
Shining A Light On $1.2 Billion In Chicago TIFs
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Over 100 Chicago Public Schools do not have a stand-alone library staffed with a librarian. Instead of using property tax dollars to ensure our students have the resources they need, Chicago gives nearly $250 million of it every year to connected developers in the form of Tax Increment Financing (TIFs).
TIFs aren't just a tool for economic development. They're a tool for consolidating power. The mayor ultimately controls these accounts, which gives him leverage over every public entity, from the City Council to the public schools to the Park District. As we've previously reported, at least half a dozen aldermen have told us that mayoral aides pressure them on key votes—such as the ordinances for funding the Olympics or moving the Children's Museum to Grant Park—by either promising to give their wards more TIF dollars or threatening to take TIF dollars away.
The more TIF districts are created, the more money goes into the TIF accounts and the more powerful the mayor becomes.
Graphic by Paul John Higgins
The Chicago Teachers Union is mobilizing members to lobby their Aldermen to sponsor an ordinance declaring a TIF surplus and redirecting that surplus into schools, which can be used to offset the budget shortfall claimed by the Board of Education, putting teachers back into their classrooms.
The Shadow Budget
The Daley administration commands an off-the-books kitty of taxpayer money equivalent to a sixth of the official city budget. Now we’ve got documents that show what they want to do with it.
But behind the scenes, the mayor and his chief aides were proposing to spend millions of taxpayer dollars on a rehab of Willis Tower, subsidies for privately run hospitals and Fortune 500 corporations, and pet neighborhood projects that won't be included in the official city budget.
We recently came into possession of hard evidence of what we've long argued: that the city produces two annual budgets, one released to the public, covered by the media, and debated by the City Council, and the other forged behind closed doors by the Daley administration, shared only in pieces with certain aldermen, and never fully disclosed to citizens. Both budgets are funded by taxpayers.
By Ben Joravsky and Mick Dumke
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The CTU's preferred approach to TIFs are returning the $1.2 billion TIF surplus as a short-term option that would give Chicago Public Schools and all public services a much-needed shot in the arm. For a long-term fix, TIFs should only exist in truly blighted areas and the monies held and spent as a trust by local community members and officials.
Shedding Light on the Shadow Budget
The TIF budget we recently pried from the city's grip reveals drastic inequities in how the money's spent
Daley has claimed for years that the program is the city's chief tool for bringing economic development and infrastructure investment to neighborhoods that couldn't otherwise attract them. "Most of [the TIF money] is pledged for economic development in depressed areas, to bring jobs back or keep jobs there," the mayor said on WBEZ last month.
Graphic by Paul John Higgins
In the case of the market, the City Council, at Daley's urging, voted in 2006 to spend a total of $12 million in taxpayer money on construction of a new shopping area in the Ogilvie Transportation Center; $8 million of that sum went to the French Market. The project happens to be headed by a well-to-do, politically connected developer who's contributed thousands of dollars to the mayor's campaign coffers. And the city plans to spend another $23 million in the River West TIF district through 2011.
By contrast Roseland, one of the poorest neighborhoods in town, will get just $5 million to spend through 2011.
That's typical of how the TIF program works citywide, according to the Daley administration's own budget for the program—a document that the Reader obtained through a series of Freedom of Information Act requests and posted at chicagoreader.com last Friday. This is the document we've been referring to as the "shadow budget" because the city puts it together behind closed doors and had previously refused to release it publicly, even though it maps out the use of about half a billion dollars a year in taxpayer money.
Though most TIF districts are on the south and west sides, those in the city center generate—and therefore get to spend—most of the money.
By Ben Joravsky and Mick Dumke
http://www.chicagoreader.com/...
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