Getting the most out of West Side TIFs

January 4, 2016
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Roughly $84 million was generated from 13 tax increment financing districts on the West Side in 2014, but that property tax windfall hasn’t generated the kind of economic development community activists are looking for.

The city’s 148 TIFs collected about $372 million in 2014, down 12 percent from the previous year, according to the Cook County Clerk’s annual TIF report released in July, based on data provided by Chicago Department of Planning and Development.

Tax increment financing is used by municipalities to jump start economic development in blighted neighborhoods littered with empty vacant lots and boarded-up buildings. A portion of property tax revenue is set aside in a special fund to help turn those areas around, either through public works projects or investments from private developers.

West Side TIFs actually saw a $2 million increase in 2014 over the previous year.

But four TIFs generated zero revenue last year: Harrison/Central, Ogden/Pulaski, Kostner and Little Village East.

But while other parts of the city – especially Chicago’s Downtown – have benefited from TIF developments, the West Side hasn’t kept pace.

Two years ago, Mayor Rahm Emanuel announced a plan to use $55 million in tax increment financing to build DePaul University’s basketball arena in the South Loop. After public criticism, Emanuel backed off that amount and said instead that about $30 million in TIF funds would be used only to acquire land for the project.

West Side TIFs haven’t been able to attract such mega projects.

The Department of Planning and Development oversees TIF projects, which range from street repairs to renovations for some schools. But West Side community leaders envision bigger projects but attracting private developers has been difficult.

Ald. Chris Taliaferro (29th) said more education about and marketing of TIFs is needed.
Since his election in last April’s run-off, Taliaferro said he’s had just one developer contact his office inquiring about TIFs.

“I would like to see it used to bring in big businesses,” Taliaferro said. “There are a lot of different economic packages available from the city. It’s a matter of making others aware.”

The alderman said he’d like to see West Side TIFs used for things like grocery stores and libraries, as well as health centers.

Taliaferro said his office has hosted community meetings about TIFs for residents and potential developers, but many people remain unaware of TIFs and how they work.

“When TIFs come up in meetings, some people will say, ‘We don’t want any TIFs in our neighborhood,’ thinking it’s some kind of tax or scam by the city,” Taliaferro said.

His ward includes the Austin Commercial TIF, which runs from North Avenue, Division Street and Chicago Avenue, from Austin Boulevard to Cicero Avenue, and Central Avenue between Ferdinand Street and North Avenue.

That TIF, which began in 2007 and set to expire in 2031, collected revenues of roughly $619,000 in 2014 and nearly $559,000 in 2013.

But records from the planning and development office show that it spent about $727,000 in 2013, mostly on public works projects and rehabbing commercial properties. The Austin Commercial TIF, like many others in the city, is flush with cash sitting in large fund balances – that’s a pot of money collected over the life of the TIF.

As of 2013, the Austin Commercial TIF has just over $6.8 million in fund balance.

The Homan/Arthington TIF which includes parts of the North Lawndale neighborhood, has a $6.9 million fund balance and collected about $480,000 in revenues last year.

Citywide, the total fund balance accumulated from all TIFs is about $1.7 billion, according to the TIF Illumination Project, a watchdog group that’s been investigating tax increment financing in Chicago since 2013.

The group has done “illuminations” for 29 of the city’s 50 wards so far. After wading through pages upon pages of documents and data from the city – usually obtained through a Freedom of Information Act request – the project presents its findings at public meetings held in a ward.

Tom Tresser, the project’s co-founder, said TIFs are bad because they siphon property tax dollars away from schools in need of money and toward pet projects run by the mayor’s cronies.

Communities like those on the West Side in need of development suffer as a result, Tresser insists.

“If you’re in a poor disadvantaged community of color and you’re advocating for TIFs as they are, you’re shooting yourself in the foot,” he said. “The way Chicago has been run and set up for many many years, TIFs cannot possibly help disadvantaged communities, because TIFs only work if you have a rising tax base.

“The question is, ‘Who’s planning what for whom? What does development mean?’ The city says, ‘Well, let’s build a Walmart.’ But no one asks the community, ‘What do you want? What would make this community great?’ You might get a completely different answer.”

Tresser wants TIFs eliminated, replaced instead by bonds the city can sell to raise money for projects. Tresser, who’s also co-founder of CivicLab, the Chicago nonprofit that runs the TIF Illumination Project, said he doesn’t trust alderman either with handling TIFs.

But TIFs can actually help poor neighborhoods as long as there’s transparency and broad community input, said Amara Enyia, executive director of the Austin Chamber of Commerce. Enyia doesn’t consider TIFs a slush funds but rather a pool of cash to help communities better themselves.

The chamber hosts workshops with business owners and entrepreneurs on how to access TIF dollars and other resources in the city.

And the chamber is actively recruiting private developers and has several big projects its working on, Enyia said, including creating an entertainment district along Chicago Avenue.

In order to attract more interests in TIFs, however, the city needs a comprehensive plan and strategy on how that money gets spent and for what, Enyia insists.

“TIFs can be a good thing if used effectively,” she said. “It’s a common economic development tool used across the country. It’s not something that’s unique to Chicago. And as for TIFs being a slush fund for the mayor, I think that’s less of an issue with TIFs themselves and more of a governance issue with the city.”

The city also needs an independent body overseeing TIF allocations, said Enyia, who ran for mayor last spring before dropping out.

Ald. Taliaferro said he also supports community input on TIFs projects, insisting it’s up to his office to better promote TIFs in his ward.

But before West Side TIFs can start attracting commercial development, they need to be reformed, said Valerie Leonard of Lawndale Alliance, a community activist group that has studied the effect TIFs have had on their neighborhood.

The alliance dug into Lawndale’s TIF districts from 2007 to 2009, looking at projects the money purportedly was spent on. The group also tried to determine if women and minority contractors were hired for any jobs.

The city’s data did not provide information on minority- and women-owned contractors hired, according to the alliance’s 2010 report, “The Time for TIF Reform is Now.”

Residents of North Lawndale’s 24th Ward, according to the report, said they felt left out of the city’s economic planning and activities. The report also called for establishing TIF advisory councils for every district in the ward.

Leonard agrees with Enyia that a comprehensive and transparent plan is needed for how to allocate TIF funds.

“If our leadership had a comprehensive plan, then we would see more utilization of TIFs,” Leonard said, adding that she also favors TIFs as an economic tool.

“I have never ever been against TIFs. I’ve always been against the lack of transparency and the lack of involvement.

“I’ve always advocated for the best use of TIFs to maximize the economic impact for the community,” Leonard added. “I don’t think the city or past alderman that we’ve had were intentional in that regard.”

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