Inspector general urges Lightfoot to deliver TIF reforms Emanuel promised

Mayor Lori Lightfoot was urged Monday to reform Chicago’s tax-increment-financing program in a way that was promised, but never delivered, by Rahm Emanuel.

In a 13-page follow-up audit, Inspector General Joe Ferguson concluded that key recommendations made in 2011 by the former mayor’s TIF reform panel had not been fully-implemented.

City Hall has yet to establish “performance thresholds needed for strategic review across TIF’s,” nor is there “subsequent accountability, including consequences” for failing to meet those standards, the audit concludes.

The city’s capital improvement program does not “comprehensively detail funding” to meet infrastructure needs or satisfy best practices, making it “insufficient for allocating TIF resources,” Ferguson said.

Nor does the city publish “thorough justifications to support the conclusion that private development would not occur without TIF funding.” Such a conclusion is key to meeting the so-called “but for” guideline mandated by state law — that “but for” the use of TIF money, the project wouldn’t happen.

Chicago’s economic development plan “lacks local development goals, objectives and milestones, limiting its use as an effective guide for TIF decision-making” while the TIF oversight body has no “documented responsibilities, leadership authority or accountability.”

And many TIF metrics are either unavailable online, not user-friendly, difficult to access or simply outdated.

Ferguson noted that TIF is a tool “designed to eradicate blight, improve infrastructure, and foster economic development.” Policed properly, the funds also can promote “equitable development of affordable housing,” expand the city’s job base, and put “vacant land to productive use,” he said.

“Unfortunately, this potentially important redevelopment tool is as often regarded as an engine for perpetuating inequity as it is for eradicating it,” Ferguson was quoted as saying.

“It is critical that TIF usage is regularly evaluated, justified, and held accountable. If it is to be regarded as effective and legitimate, there must be clear, enforced standards, criteria, and performance metrics that are publicly transparent.”

With several large and “highly controversial TIF projects on the drawing board,” the inspector general strongly urged Lightfoot to “move swiftly to ensure” the stalled reforms are “fully implemented.”

Ferguson’s report also could strengthen the case made in a pending civil rights lawsuit.

Seven weeks ago, an unprecedented lawsuit filed by the Grassroots Collaborative and Illinois Raise Your Hand for Public Education charged that a $900 million TIF subsidy approved by the City Council to unlock the development potential of the $6 billion Lincoln Yards project violates both the Illinois Civil Rights Act and the “but, for” requirement of the TIF statute.

If granted, the injunction the groups sought would prevent developer Sterling Bay from spending any money on infrastructure that would ultimately be reimbursed by funds generated by the newly-created, 168-acre Cortland and Chicago River TIF.

Grassroots Collaborative Executive Director Amisha Patel said Ferguson’s follow-up audit underscores how much “everyday neighborhood residents are suffering” from a TIF program that has veered “way off-course from the original intentions.”

Patel said Ferguson’s findings “validate our position, by pointing out that the City consistently fails to provide proof that private development would not occur without TIF funding.”

Patel urged Lightfoot to go beyond the 2011 reforms that Emanuel failed to deliver---and start with City Council approval of a stalled TIF Surplus Ordinance “so that our property taxes do not languish in what we all now know continues to be a deeply flawed executive slush fund.”

The new mayor was also urged to hold hearings on Chicago’s TIF program in the impoverished neighborhoods the program was “originally intended to help.”

“We must examine the racial underpinnings of the way TIF funds are used to disinvest in some communities, and invest in others,” Patel said.

“Currently, we see the TIF program being used to divert property taxes to some of the whitest and wealthiest parts of the city. Immediate action is required to bring the TIF program back in line and ensure that our property tax dollars are spent equitably.”