Preckwinkle wants Rahm’s share-the-wealth fund to offer grants, not rebates
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Nearly three years ago, the City Council signed off on Mayor Rahm Emanuel’s plan to generate a pot of money to rebuild struggling neighborhoods at the expense of downtown developers.
Despite concerns it would create a mayoral “slush fund” akin to tax-increment financing, aldermen agreed to let developers in a broader downtown area build bigger and taller projects so long as they agree to share the wealth with long-ignored South and West Side neighborhoods.
Now, Toni Preckwinkle wants to reform that Robin Hood program to get sorely-needed capital to small businesses and drive down stubbornly high unemployment.
Instead of offering rebates ranging from $100,000-to-$250,000 to reimburse small businesses for construction and rehabilitation costs, Preckwinkle wants to make up-front grants.
To prevent fraud, grants would be placed in “construction escrow accounts” and dispersed by “third-party inspectors contracted” through a “Target Market pool of inspectors” from the impacted community.
Inspectors would ensure that grant money is spent only for the purposes stipulated and that “contractors make good on their bids.”
“Since minority businesses are challenged in the financial markets already, making it a rebate makes it harder to use because that means you’ve got to get the financing someplace else and pay the interest on it while you accumulate receipts. It makes more sense to make it a direct grant,” she said.
To boost unemployment in job-starved, high-crime neighborhoods, Preckwinkle wants to dramatically increase — from 15 percent of the grant to 50 percent — the maximum bonus awarded to businesses that hire from the surrounding area.
That would allow those businesses to recoup up to 100 percent of project costs instead of the current maximum of 65 percent.
To qualify for additional bonuses, businesses would have to exceed the current, two-job mandate and hire “difficult to employ” young people, ages 16 to 24, who are out of work and out of school or have criminal records.
They would also need to pay those employees more than the city’s minimum wage — now at $12-an-hour, rising to $13-an-hour on July 1.
Bonus-eligible businesses would be “rigorously” audited in six- and 18-month intervals to make sure “employment and wages have been sustained,” under the plan.
“Increasing the incentives to hire locally will be helpful to the communities in which the businesses are located,” Preckwinkle said. “We’re trying to make the program easier to use for the intended target population and also increase the incentives to hire locally.”
The Neighborhood Opportunity Fund has an embarrassment of riches, thanks to big-ticket development projects in and around downtown Chicago.
During the October City Council meeting alone, aldermen signed off on a parade of projects that, together, could flood an already booming Chicago market with 7,000 residential units, more than 1,200 hotel rooms and 2 million square feet of additional office space.
The projects are located at Union Station, at the Lakeshore East complex that has become a neighborhood unto itself and on a riverfront site owned by Tribune Media that Amazon once considered for its second North American headquarters.
The Tribune Media project alone will generate $76 million for the Neighborhood Opportunity Fund and $13.5 million in Industrial Corridor fees.
Thursday, Preckwinkle noted that, as of mid-November, the wildly-successful program had made grants of $20 million on the South and West Sides. Another $42 million has been collected, with $200 million more in the pipeline.
“This is a considerable resource and we just want to make sure this program is as effective as possible,” she said.