The Latest Tax Increment Financing District Atrocity

Four $16,000 stone monuments were paid for out of Tax Increment Financing money on Virginia Street. All property owners in McHenry County shared in the cost. The pillars mark the eastern and western edge of the TIF District.

Of course, readers know that I think all TIF Districts are attrocities.

I am so pleased that I voted against the bill back in the 1970’s.

TIFs are a way to provide slush funds for those who rule municipalities.

They are financed by everyone living outside of the district as their property taxes go up to make up for the lost revenue that goes to developers.

Even in Crystal Lake, the City Council HAD to spend every last dime of the Downtown TIF District.

IN any event, here is Wirepoints latest story on Tax Increment Financing Districts:

Mayor Lightfoot Returns to Ol’ Standby Slush Funds to Help Pay Bills – TIFs – Wirepoints

July 1, 2020

By: Mark Glennon*

It’s not often that we’re on the same page with Tom Tresser of CivicLab and Ben Joravsky of the Chicago Reader.

But on the central problem with tax increment financing in Chicago – their abysmal lack of transparency — we’re on common ground, along with most everybody else.

The concept behind TIFs seems sensible on its face:

If a city pays for improvements or development incentives for a particular area, the cost should be recouped through property taxes on the windfall increase in valuation owners in that area enjoy.

In Chicago, however, they boil down to nothing more than this, as CivicLab puts it on their website: “TIF = Slush Fund.”

LaSalle Street in Chicago

Chicago’s 136 TIF districts cover about a third of the city, according to Medill Reports, and in 2018 they collected a whopping $841 million in property taxes.

TIFs are supposed to be for blighted or underserved neighborhoods, but downtown LaSalle Street is among the areas in a TIF.

Those statutory standards are lax enough that even a section of swanky, suburban Kenilworth qualified for a TIF, as we wrote earlier.

But the real problem in Chicago is that they are indeed a slush fund, and an extraordinarily opaque one at that.

TIF money for decades got diverted to pet projects de jour of whomever the mayor was, usually glamor projects like Navy Pier improvements.

Today, however, it’s pure necessity.

As reported by Greg Hinz at Crain’s on Tuesday, Mayor Lori Lightfoot’s administration quietly requested insertion of two lines in a 26-page bill passed last month by the General Assembly allowing her extend the life of a near-north TIF to provide $36 million to a housing development.

The city explained that it was obligated to pay the money for replacement of low-income units required by federal court decree when much of Cabrini-Green was demolished.

But money is fungible and in mighty short [supply] for the city, so it’s pretty obvious that what’s really happening is TIF money is being used to make ends meet.

TIFs are a “shadow budget,” as Joravsky put it, because its impossible to know what’s going where or why.  

How much do the TIFs—with their annual take of hundreds of millions—add to Chicagoans’ property tax bills?

Here’s Joravsky’s candid answer, despite his years of detailed research on them:

“I can’t tell you because I don’t know. I’m not privy to the information I need to make such calculations. Those who have the info aren’t talking, presumably because they don’t want you to know.”

Lightfoot in February announced TIF reforms including more transparency, more rigorous procedures and “equity” as the central focus of TIF subsidy decisions with pivotal input from Chief Equity Officer.

However, her reforms were widely criticized as being too little, too late.

Joravsky likened reform to a game of three-card monte.

“As for ‘reforming’ the cost part of the TIF by telling us, you know, how much they cost—don’t hold your breath,” he wrote.

Block Club Chicago covered other critics.

Part of the fight is over where the money should go – schools, housing or whatever.

Tresser is particularly critical of Lightfoot’s latest move and gave me the following comment.

CivicLab would abolish them entirely and has a petition going on that.

The CivicLab is appalled at the back–room, opaque tactics being employed by Mayor Lightfoot to extend the life of the Near North TIF.

Created in 1997 it has stolen a total of $292.5 million in property taxes from the units of government that rely on property taxes for operations.

The biggest loser was, and will remain, Chicago’s stressed public school system.

Since our public schools serve a majority student body of color, we call TIFs racist and that they need to be abolished.

The pro-business Crain’s Chicago TIF-loving reporter Greg Hinz called the move by the Mayor “unusual and unheralded.”

Well, we at the CivicLab have been heralding the hell out of TIFs since 2013 through deep research and 80 public forums.

TIFs are racist, unfair, corrupting, and promote terrible planning and governance practices – like this one.

It’s safe to expect more raids on TIF money to make ends meet in Chicago.

How much more is available from TIFs?

Heck if we know.

That’s part of the transparency problem.

We have yet to identify what if any logic goes into the process of declaring a TIF “surplus” and what the total truly is.

Last year, however, Lightfoot declared a $300 million TIF surplus, so the potential again is no doubt huge.

Count on plenty of fights over who gets it.


The Latest Tax Increment Financing District Atrocity — 10 Comments

  1. PIGS at the Trough, more Swamp tactics…

    what else is new..

    must be VOTED OUT!

    but that’s not going to happen until these STUPID brain dead citizens wake up!

  2. Chicago political class is not alone in weaponizing TIF.

    Suburban TIF districts have devalued properties outside the TIF umbrella, and raised property tax rates by significant amounts.(See academic studies by Dye and Merriman on deleterious effects of Illinois TIF).

    Example: Woodstock IL. The latest residential TIF project turned a commercially zoned property into a multifamily residential zoned project, for which Woodstock gave developers over $1 million grants.

    Assuming an assessment comparable to similar properties, and using standard formulas to present-value the assumed annuity-in- perpetuity promised by this development to begin payments in 23 years (highly unlikely it will pay anything to taxing bodies until 35 years out)…

    Woodstock taxpayers have already locked in a loss.

    The present value of that property’s tax payments is smaller than the present value of $1 million of taxpayers’ dollars and asset value handed to development team by Woodstock City council today.

    Put another way: Woodstock could pay down public debt with that money and save taxpayers far more than the present value of the promised TIF development property tax income which cannot begin to be collected until 23-35 years in the future.

    Now that is not the worst new burden this project heaps upon to existing taxpayers.

    35 new dwellings may add 21 new students (0.6 school-aged children per housing unit according to latest US Census) to Woodstock D200 schools.
    TIF statute strictly forbids TIF funds be paid to schools above token amounts which do not begin to cover the true costs of providing mandated education.

    In Woodstock IL, the actual property rate is 4% of fair market value (12% of EAV).

    In D200, the property tax levy per student is now around $10,000 per year per student. (That is: school property tax levy divided by enrollment).

    With 21 new TIF enrollment, taxpayers outside TIF zone will now be obligated to pay for the brand new expense of these 21 freeriders at over $200,000 per year, rising with inflation.For at least 23 years, most likely 35 years.

    As property tax rates are derived by the formula: levy/EAV, and TIF property development or inflation assessment increases are not included in taxable EAV for the 35 year legal lifetime of TIF, one can easily see how the property tax rate can only rise as a function of TIF.

    Is any contributory (non-TIF) real estate development likely to occur in a 4%+ property tax rate region? Because if none does, and existing properties’ values, even farmland, continue to depreciate as they have in past 15 years, Woodstock will see property tax rates like Harvey, and fairly soon.

    There is a solution: make every property in Illinois TIF eligible, and rebate each property owner his TIF incremental payment pro rata.

    This would solve many problems:

    Corruption would disappear because the public could not be forced to front money for one politician’s buddy’s project.

    Beggaring-thy-neighbor would disappear, in that poshy communities could no longer rely on subsidization from beleaguered taxpayers “outside” the poshy bubble.

    Holding ALL Illinois properties at constant assessment values for 23 years would start to shift the property tax pain burden onto wealthy areas enjoying now TIF funding at others’expense (others whose propertyassessments rise with normal inflation).

    And development would be motivated for proper economic reasons, not artificial profit opportunities only made possible by legal gizmos like TIF and crony socialism like TIF-runners practice today.

  3. Glad to hear it, LeopardMan. Cal knows how much I hate those Satanic phallic obelisks. He knows it cranks me up every time he posts those pictures. LeopardMan? When do the rest responsible for this get to go with him?

  4. $16,000 each!!!

    That includes like a detailed statue that they just held off putting on each of them for now, because of BLMer thugs right??

  5. Cal isn’t posting this to mess with you, Cindy.

    He’s just showing how taxpayer money was used inappropriately.

    Also, I’m not even sure if this could be considered an obelisk since the top looks flat.

    Obelisks have pointed tops.

  6. Will there be statutes of Geo. Floyd, Shepley, Franks and Kenneally put atop the 4 pedestals?

  7. On second glance, it might be an obelisk.

    There’s one in the background by Pizza Hut and it looks like there might be a pyramid on top.

    Either way, I’m pretty sure Cal does not support this.

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