IVI-IPO ask Alderman to atop creation of new TIFs
By Gail Mansfield
Adding its voice to the growing chorus calling for reform of tax-increment financing (TIF) in Chicago, the Independent Voters of Illinois-Independent Precinct Organization (IVI-IPO) is asking aldermen to temporarily halt the creation of new TIFs.
TIF, a mechanism
that allows municipalities to earmark tax revenues from property value
growth within a defined district to finance development in that same area,
has become the development tool of choice in Chicago and a favorite program
of Mayor Richard M. Daley, who maintains almost total control over the TIF
process.
“With continued budget shortfalls at the City, County, and
Chicago Public Schools (CPS), IVI-IPO calls upon the Chicago City Council to
enact a moratorium on creation of any new TIF districts until the City
identifies a new funding source to replace the tax dollars that will be
diverted to the TIF,” the IVI-IPO statement says. “We also are asking the
City to initiate a review of all existing TIFs and terminate those that are
determined to have fulfilled their purpose, so their new tax revenue can
flow to the individual taxing bodies.”
‘TIF is important’
James Balcer, alderman for the 11th Ward, said he will not support the moratorium, citing a list of TIF-funded redevelopment efforts in his ward. “TIF is important,” he said. “Everybody has an opinion, but the TIF is needed and the proof is what we’ve done here.”
Daniel Solis, 25th Ward alderman, concurs, mentioning several projects in his own ward that were reliant on TIF money. “There’s dozens of TIFs in the city, and without them we couldn’t be doing the development work we’re doing now,” he said.
“I don’t think they [the IVI-IPO] understand the TIF very well,” Solis commented. “The TIF doesn’t stop funding to the other taxing bodies…any new revenue generated by the TIF above a base goes to the TIF district…The only way there’s new revenue generated is, because of the attractiveness of the TIF, business comes in…and generates tax dollars where there weren’t tax dollars.”
The IVI-IPO
argues that “most property does appreciate over time, even without new
investment [created by a TIF]. It is this natural revenue growth that is
lost to the City, County, CPS, and other taxing bodies.
“As expenses grow with inflation, revenue does not grow at the
same pace, because that growth is diverted to the TIF,” the statement
continues. “We can not cover the inflationary increase in government
expenditures, much less any new budget items, if one-third of the property
in the city doesn’t generate any inflationary increase in taxes. The City
Council must start showing some restraint in designating new TIFs.”
A report conducted by Cook County Commissioner Mike Quigley, “A Tale of Two Cities: Reinventing Tax Increment Financing,” agrees with the IVI-IPO about the effects of inflation on local taxing entities. “Because of how the State TIF legislation is worded, local governments in Cook County have lost nearly $700 million simply to inflation" through 2005, that report maintains.
Not just for blight anymore
The IVI-IPO also criticizes the use of TIFs, originally designed as an incentive for private investment in blighted areas, in parts of the city that already are thriving.
“TIFs in Chicago have long ago strayed from [the original] purpose, and have been designated in prospering residential and commercial areas that do not need to provide incentives for development,” the IVI-IPO statement says.
“But one-third of
the property in Chicago, including some of the most expensive real estate in
the city–the central Loop, LaSalle Street Financial District, Sears Tower–is
[now] in a TIF. The tax growth from rapidly appreciating property owned by
our most prosperous businesses is lost to us for years. This is a major
factor contributing to the budget shortfalls at the City, County, and CPS.”
Referring to his own ward, Balcer commented, “Some of these
areas weren’t completely blighted—they weren’t really bad areas—but you
still needed the TIF; you still needed some kind of help. Without that
money, the [old Chicago] Amphitheatre still sits there.”
The IVI-IPO also is proposing a review of existing TIFs and the termination of those TIFs that have met their stated objective.
Balcer gives a thumbs-down to the idea. “What if you have other buildings that become blighted?” he said. “What if you have other projects that need money? What do you do then?”
Aldermen Toni Preckwinkle of the 4th Ward and Pat Dowell of the 3rd Ward did not respond to requests for interviews, but both stated in the IVI-IPO questionnaires preceding the 2007 aldermanic election that they supported ending TIFs that had accomplished their purpose. Further, Dowell and Preckwinkle said they did not support extension of the controversial South Loop TIF. Preckwinkle commented, “Including some of the city’s most valuable land within a TIF district seems inconsistent with both the law and public policy. TIF districts are designed to provide additional resources for struggling neighborhoods and should not be used in the Loop.”
The IVI-IPO statement concludes, “IVI-IPO recognizes that aldermen have become very reliant on TIFs to procure development and amenities for their communities. Breaking this dependency may be tough, but it is imperative for the financial health of our city, schools, parks, county courts and health systems. “Funding community improvements should be the responsibility of the entire city and we have confidence that our elected representatives, if they pull together to enforce this fiscal discipline, will also be able to work together to provide for all of our neighborhood needs.”
Aldermen Walter Burnett Jr., 27th Ward, and Robert Fioretti, 2nd Ward, could not be reached for comment.
