The City Council on Wednesday unanimously authorized a transit tax-increment financing district in hopes of nailing down $1.1 billion in federal grants to modernize the CTA’s Red Line before President Barack Obama leaves office.
After the vote, Mayor Rahm Emanuel affixed his signature to the various ordinances. That’s because Wednesday was literally the deadline for the city to demonstrate its commitment to providing local matching funds.
Civic Federation President Laurence Msall has warned of the precedent being set — and the pressure being placed on beleaguered Chicago property owners — by the city’s decision to go it alone. Msall has noted that the state has always helped the city come up with matching funds needed to access federal funding.
But North Side Ald. Harry Osterman (48th), whose Far North Side residents are heavily dependent on the Red Line, said aldermen have no other choice but to go to “Plan B.”
“With no possibility of a state capital bill, we’re left with a transit TIF [to hold onto] highly competitive,” federal funds, Osterman said.
“We have to act now. We cannot wait . . . The reality is, if we don’t act now, that federal money is not going to be there.”
Ald. Edward Burke (14th), the City Council’s resident historian, resorted to hyperbole.
“The very future of public transportation in Chicago is at stake in today’s vote,” Burke said.
Ald. Emma Mitts (37th), whose West Side ward has been inundated by homicides and shootings, used the vote as an opportunity to “vent” about the bloodshed on Chicago streets that has “the world watching Chicago.”
“I’m sick and tired” of children being traumatized, Mitts said.
Planning and Development Commissioner David Reifman has referred to Wednesday’s vote as “threading the needle.”
Wednesday is literally the deadline for Chicago to demonstrate its commitment to provide the $622 million in local matching funds needed to access that so-called “core capacity grant.”
The remaining $428 million in matching funds will come from the CTA.
“Under the TIF statute, we cannot take this to City Council earlier than Nov. 30. Under the timeline the feds have given us for this grant, we can’t get them this later than Nov. 30. So, we are literally threading the needle to make the Nov. 30 date,” Reifman told reporters during a City Hall briefing earlier this month.
“The agreements and the ordinances — our part of the match — has to be fully in effect, then has to go to Congress for 30 days before it can be approved and closed under that grant agreement.”
The mayor’s intention was always to try to seal the deal before the Jan. 20 inauguration of a new president because of the normal slowdown that takes place whenever there is a changing of the guard in Washington.
But City Council approval of the transit TIF legislation took on a bit more urgency after Donald Trump defeated Democrat Hillary Clinton, the mayor’s candidate for president.
Under a normal TIF, property taxes are frozen at existing levels for 23 years. During that time, the “increment” or growth in property taxes are held in a special fund and used for specific purposes that include infrastructure, public improvements and developer subsidies.
The transit TIF would remain in place for 35 years.
The financially strapped Chicago Public Schools would get its 50 percent share of the growth off the top. The transit TIF would get 80 percent of the rest. The remaining 20 percent would be shared by the city and other taxing bodies.
In the race to beat the federal clock, top mayoral aides and CTA officials have held a series of public hearings and aldermanic briefings to outline previously undisclosed details of the transit TIF.
The taxing district has actually shrunk since the original plan. It would now run for roughly six miles — from North Avenue to Devon — and include one-half mile on either side.
To make way for the Belmont Flyover, 23 parcels that include 16 buildings would be seized; the Flyover is a massive elevated structure intended to clear up a bottleneck where the Brown Line separates from — and crosses — the Red and Purple lines; that will allow the CTA to run up to 15 additional trains per hour on the Red, Purple and Brown lines.
Lincoln Park residents already hit with the double-whammy of rising property taxes and increased assessments have warned that the transit improvements could send their property taxes through the roof.
Those fears could be further fueled by the debt service table released by the city.
It shows the transit TIF generating $803,251 next year, $8.4 million in 2018 and $26.9 million in 2021. The revenue would rise to $46.3 million in 2024, $67.1 million by 2027 and $113.5 million by 2033. By 2033, the total take would be $851 million.
“You have some very steep increments — up to 800 percent between 2015 and 2018 . . . What are you using to kind of establish how this will increment?” Ald. John Arena (45th) asked at the second of two “subject matter” hearings before the City Council’s Finance Committee on Monday.
Reifman replied: “Those larger shifts represent triennial reassessments. That’s what accounts for those big jumps in three-year increments . . . It’s simply a projection but it’s based on historical jumps.”
Budget Director Alex Holt has urged area residents not to be alarmed by the schedule of debt service payments.
Holt has argued that the tax rate used to determine the property tax bill would actually decline over the life of the transit TIF as the 144 other TIF’s across the city expire.
“When you get a TIF, the potential is to increase the tax rate that then increases the taxes for people as a whole. That’s a concern. It’s certainly legitimate,” Holt told reporters earlier this month.
“But over the next 35 years, all of the TIFs the city currently has in place are going to begin to roll off. All of that’s going to return increment and value to the base. So the end result of this — even with this TIF in place — is that we have a tax rate that’s lower than the tax rate we have today.”
Lincoln Park Ald. Michele Smith (43rd) was not appeased. She’s “very wary of the open-ended nature” of the groundbreaking transit TIF, she said.
“It’s creating a precedent for how things get funded that shouldn’t be funded through TIF. The Brown Line, the Red Line [South] and almost every transit project in the past has been funded by a combination of federal and state funding. Those are our tax dollars as well,” Smith said.
“This creates an economic burden for decades that limits our ability to raise money for other things [like recreational space]. Our taxpayers in the 43rd Ward are heavily burdened. They would like to see some return that more directly affects them.”
Far North Side Ald. Harry Osterman (48th) countered that the city has no other choice in the absence of a state capital program to bankroll the local match.
“The line is 100 years old. The rail line is crumbling literally. It’s been patched and duck-taped. On an annual basis over the last 20 years, CTA has spent over $50 million to do repairs on slow zones. What we’re doing here is to solve that problem for the next hundred years,” Osterman said.
By the time the work is completed in 2025, Red Line tracks from Lawrence to Bryn Mawr may be five to 10 feet higher than they are now because they must be replaced and secured on rebuilt embankments, CTA officials have said.
In addition, the controversial Flyover that will separate Brown Line tracks from Red and Purple Line ones will be, at its peak, about 20 feet higher than current tracks, CTA officials said.
Signal improvements will occur from Belmont to Howard, and four stations in a row will be improved from Lawrence to Bryn Mawr.
The Wilson Street station and the massive 95th Street terminal are currently being rebuilt.
If the mayor can nail down the $1.1 billion to complete the $2.1 billion Red-Purple Modernization project, the next hurdle will be to deliver on his campaign promise to extend the Red Line from 95th Street south to 130th. That long-awaited project carries a $2.3 billion price tag. The CTA has set aside $75 million for planning and engineering to start the ball rolling.