City Council approves Emanuel’s share-the-wealth plan

The City Council on Wednesday approved a share-the-wealth plan that Mayor Rahm Emanuel hopes will generate a pot of money to rebuild struggling neighborhoods at the expense of downtown developers.

Despite concerns that it would create a mayoral “slush fund” akin to tax increment financing, aldermen agreed to revised density bonuses that will let developers in an expanded larger downtown area — about 20 percent bigger, with 800 additional acres — build bigger and taller projects to generate millions to rebuild long-ignored neighborhoods on the city’s South and West sides.

The vote was 46 to 2. No votes were cast by downtown Ald. Brendan Reilly (42nd) and South Side Ald. Leslie Hairston (5th).

“Development in our Central Business District, we want to make sure that becomes the source for also investing in neighborhoods that are striving to thrive but are struggling at this point. That there’s resources beyond TIF to help invest in those communities,” the mayor said.

Emanuel sloughed off suggestions that the ordinance would create a TIF-style “slush fund” for him to control.

“People can make whatever accusations [they want to make]. They just don’t happen to be true. … It’s done on the same foundation, same principles and same guidelines as our Affordable Housing Trust Fund,” the mayor said.

“What’s missing is investments in neighborhoods that want to have a thriving retail and commercial area, as we have done with the Whole Foods in Englewood or the Mariano’s that’s about to open in Bronzeville or the Wal-Mart we opened up, both in Bronzeville as well as down in Pullman. In each of those areas, we have made investments that have returned to a community a commercial and retail strip that had not existed.”

Earlier this week, Reilly warned his colleagues that they were “handing over an incredible amount of control” to the mayor and his handpicked Planning and Development Commissioner David Reifman.

Reilly complained about the “big open void” that would be created by allowing Emanuel and Reifman to award grants under $250,000 without City Council approval.

“Some people whom I’ve talked to have equated this to a slush fund,” Reilly said.

Critics have long complained that TIFs have created a fund that Chicago mayors can dole out to clout-heavy developers who fill their campaign coffers.

Reilly raised those same issues about the so-called “Neighborhood Opportunity Fund” ordinance. He supports the concept of getting rid of “outdated density bonuses” and dedicating the funds from a new bonus system to “support struggling communities.”

But Reilly said the current ordinance lacks enough detail about governance and transparency.

Unlike the small business improvement fund, Reilly said there is no “third-party insulated from all of the pressures that come in politics” to vet grant applications and decide who gets “gap financing for key investments in struggling commercial corridors.” He also complained about the City Council having no control over grants of less than $250,000.

“To my colleagues who care about having some control over what happens in their wards and being able to be part of the conversation on how funds are spent, we’re handing over an incredible amount of control to the commissioner of planning and to the administration without our input and consent,” he said.

Reilly argued that the “mandate on this City Council from the last election” is that voters want “more transparent decision-making, more accountability and public process when we’re spending dollars” — whether the money is generated by density bonuses or rising property taxes.

“It’s a false choice that either we get this passed tomorrow versus 3 1/2 weeks from now or else the neighborhoods go to hell in a handbasket,” Reilly said.

“This isn’t about downtown versus the neighborhoods and downtown gets everything. Downtown is doing more than its fair share of helping lift all boats and this ordinance, if it’s done right, could do even better. But to just blow by governance and transparency …. That’s a mistake, folks. We’ve been here before as a City Council, [with a mayor who says], `Trust us. It’ll be fine. Don’t worry about that. We’re in a hurry. Got to get it done tomorrow.’ We’ve been burned like that before, folks.”

Ald. George Cardenas (12th) agreed with Reilly about the need for “transparency, collaboration and building trust” with a City Council emboldened by the Laquan McDonald controversy that has weakened Emanuel politically.

“We’ve got a lot of tough votes to take ahead when it comes to raising revenue. We have a tough vote ahead on schools, rebuilding our communities. Collaboration needs to be worked on. A pause is a great way to rebuild the relationship and the trust with the administration and my colleagues,” Cardenas said.

Housing Committee Chairman Walter Burnett (27th) rose to the mayor’s defense.

“The mayor’s trying to do something. And he’s trying to do it not at the expense of us. He’s trying to do it at the expense of developers. … They should be giving back because they’re gonna be making a lot of money,” the alderman said.

“Instead of them just getting the bonus for nothing and making more money, now they’ll put money in the pot that goes to help other communities. What’s wrong with that?”

Reifman has billed the Robin Hood-style plan as a “critical way to level the playing field for underserved communities. … Our neighborhoods cannot thrive unless our downtown is strong and supports them.”

He promised a “robust and transparent process” for determining which neighborhood projects get funded, with all “grants” over $250,000 approved by the City Council.

“We have all kinds of protections. We talk about very specific types of projects it can fund and specific areas where those funds can be used. Those that can have a catalytic effect in neighborhoods, create jobs, provide goods and services that are lacking,” Reifman said.

The city’s existing Zoning Bonus Ordinance allows downtown developers to build additional square footage if they build underground parking garages, outdoor plazas, winter gardens and other features that benefit the project but offer limited public benefits.

By eliminating those outdated bonuses and closing loopholes, the mayor now hopes to generate a pool of money that could be used to bankroll projects in long-neglected neighborhoods like Englewood, Auburn-Gresham and Garfield Park.

The new program is patterned after an affordable housing ordinance that requires developers to build affordable units or make hefty contributions to a fund that would be used to build affordable housing.

Emanuel has blamed his dismal showing among African-American voters in a recent New York Times poll on “40 years” of disinvestment on Chicago’s South and West sides.

The share-the-wealth program is one of several recent steps Emanuel has taken to do something about that.

“The mayor’s priority with this program and in the second term is to create resources for the city as a whole. This is a way of leveraging our downtown growth while at the same time creating resources for our neighborhoods. It’s a false dichotomy: neighborhoods versus downtown. This is a way of demonstrating that with a program that supports both,” Reifman said.

Since early 2012, 24 downtown projects used 38 bonuses to add 2 million additional square feet of space. The revised density bonuses in a broader downtown area are expected to generate at least $10 million a year.

The money raised would be split up like this:

• 80 percent would go to a neighborhood opportunity fund dedicated to rebuilding struggling commercial corridors
• 10 percent would go to a citywide “adopt-a-landmark” fund
• 10 percent would go to a “local impact fund” to support mass transit, streetscapes and other public improvements within one mile of the sites generating development funds