The mere mention of Tax Increment Financing districts can make your eyes glaze over.
But despite the bureaucratic name — which puts TIFs on the boring scale near the Trilateral Commission and stormwater grievances — Cook County Clerk David Orr says the way Chicago mayors have spent TIF revenue should grab your attention.
“It’s a tool — it’s a way to raise money,” Orr said Wednesday at a news conference highlighting the districts, that divert some property taxes into a separate fund, ostensibly to be used to promote development.
“The problem, particularly in Chicago, it’s been a way to create a $6 billion dollar fund that most people don’t understand.”
Orr noted one TIF district’s boundaries are expanding rapidly — on the South Side, near 105th and Halsted. That district recently grew from 192 parcels to 4,575 parcels, with little explanation provided by the city.
Ald. Carrie Austin (34th), whose ward contains that expanding district, did not return a request for comment.
But Orr said that’s par for the course.
“You see incredible vagueness and lack of information,” he said. He added that it’s hard for tax payers to judge the merits of a TIF district “when the public doesn’t understand where the money is going.”
For the first time this year, Cook County property owners will be able to look at their tax bills and see just how much of their tax payment is diverted into the districts, a change Orr brought about.
Overall, TIF revenues have been in decline in recent years. Orr, who also released a report on TIF revenues Wednesday, attributed the dip to the expiration of several districts, which usually last 20 years.
TIF funds, which are spent at the mayor’s discretion, have deprived schools and other public entities of property taxes, which instead are redirected to other projects. Since 1986, the city has raised $6 billion in TIF funds, according to Orr, whose pet cause has been adding “transparency” to an area of municipal financing that has been opaque to the public.
The funds should not “be used at the whim of a particular mayor,” Orr said. “There is a legitimate critique over the last 20 years of how it’s been used.”
Brought to Chicago in the 1980s as an obscure funding tool for North Loop development, TIF districts have multiplied across the city and county. They are typically created to raise cash for special projects and improving blighted areas.
When a TIF district is created, the amount of money governments collect through property taxes in the district is capped, based on locked-in property value. Any additional property taxes collected above that amount — due to rising property values or new development, for example — is diverted to a TIF fund.
The problem is that property values in many blighted areas are stagnant or declining. And because those values do not increase, TIF districts in those areas do not collect much, if any, revenue. Meanwhile, TIF districts in booming areas reap millions. And that money can be spread around to other nearby TIF districts, so long as the boundaries of the districts touch.