Mayor Rahm Emanuel will ask the City Council to meet in special session on Nov. 30 to authorize a transit tax-increment financing district in the race to nail down $1.1 billion in federal grants to modernize the CTA Red Line before President Barack Obama leaves office.
City Planning and Development Commissioner David Reifman described the timing as “threading a needle” because the city must take two actions on Nov. 30 to secure federal funding and authorize a new TIF that will stretch along the Red Line from North Avenue to Devon.
On that date, the City Council will hold a special meeting for the sole purpose of approving the transit TIF district, a new kind of TIF approved by the Legislature in June.
Also on that date, the city must inform federal authorities that it is committed to providing the required local matching funds to $1.1 billion in federal “core capacity” grants. About $622 million of the matching funds are planned from the new transit TIF and $428 million from the CTA.
“Under the TIF statute, we cannot take this to City Council earlier thanNov. 30. Under the timeline the feds have given us for this grant, we can’t get them this later thanNov. 30. So, we are literally threading the needle to make theNov. 30date,” Reifman told reporters during a City Hall briefing.
“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. . . . This all backs into the date that the governor signed the [transit TIF] legislation.”
Reifman said the mayor’s intention was always to try to seal the deal before theJan. 20inauguration 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 this week after billionaire businessman and reality TV start Donald Trump defeatedDemocrat Hillary Clinton, the mayor’s candidate.
“Our goal was always to achieve this under the Obama administration. But certainly, we want to make sure that we hit that target now,” Reifman said.
Under a normal TIF,property taxes are frozen at existing levels for23 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, created by the Illinois General Assembly in the waning hours of the spring session, 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.
On Thursday, top mayoral aides briefed aldermen and the media on previously undisclosed details of the transit TIF.
Ald. Brian Hopkins (2nd) said afterwards he was gung-ho on the idea.
“We can’t afford to leave over $1 billion on the table, especially with all the uncertainty about what’s going to happen in Washington. We have to get what we can get now in the closing days of the Obama administration,” Hopkins 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 existing levels because they must be replaced and secured on rebuilt embankments, CTA officials revealed Thursday. In addition, a 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.
Officials also revealed that the TIF transit district has actually shrunk in size from an original tentative plan. It will now run for roughly 6 miles — from North Avenue to Devon — and include one-half mile on either side. Signal improvements are planned from Belmont to Howard, and four stations in a row will be improved from Lawrence to Bryn Mawr.
Twenty-three parcels of property that include 16 buildings would be seized to make way for the “Belmont Flyover,” a massive elevated structure that CTA officials said will allow the system to run up to 15 additional trains per hour on the Red, Purple and Brown lines.
During a recent public hearing at DePaul University, Lincoln Park residents and others already hit with the double-whammy of rising property taxes and increased assessments fretted that the transit improvements could send their property taxes through the roof.
But City Budget Director Alex Holt urged area residents not to be alarmed by the schedule of debt service payments released Thursday by the city.
The table 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. That would be enough to pay off the debt early, at which time it could be terminated. It estimates that revenue will jump about $16 million on the year of each triennial assessment, Reifman said.
Holt said that although property values in Lake View and Lincoln Park rose “enormously” during the most recent reassessment — anywhere from 10 to 30 percent — the average annual increase over the last 15 years in the 6-mile transit TIF corridor has been 3.6 percent, and that rate is expected to continue during the life of the TIF.
In fact, Holt said, the tax rate used to determine property tax bills is expected to decline over the TIF’s 35 years 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 said.
“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. With this TIF in place, we’re expecting the tax rate to go from 6.8 percent to 6 percent.”
The transit TIF may not have been necessary if the Illinois General Assembly had approved a capital bill in recent years that could serve as the source for matching funds.
But with the marathon state budget stalemate, which has puta capital bill on the back-burner in Springfield, Chief Financial Officer Carole Brown argued that Chicago has no choice but to go its own way.
Ald. Joe Moore (49th), whose far North Side residents areheavily dependent on the Red Line, said he’s all for the idea.
“If you are a Chicago resident who understands the importance of having reliable public transportation, this isa no-brainer. We need the federal dollars and, in order to get those federal dollars, we need to pony up some of our own money,” Moore said.
“It’s not a tax increase. TIFs take advantage of an accrual in the value of property,” he said. “In this case, they’re counting on refurbishing stations and renovating L lines to spur economic development that will pay for the matching funds. The TIF idea is the only way we can do it without raising taxes. It’s actually a way to ensure that we don’t raise taxes.”