Mayor Johnson's plan to borrow $1.25 billion for development projects gets mixed reception

Mayor Brandon Johnson’s plan to borrow $1.25 billion for economic development and affordable housing was met with both cautious optimism and “grave concern” as some Chicago alderpersons pushed for more transparency on how the administration will spend the money at the first public hearing on the proposal.

A slew of housing industry organizations endorsed the plan during a public comment period before Johnson administration officials were grilled by City Council members, many of whom expressed preliminary support as well.

At least one alderperson warned the administration that Tuesday’s election results — which show the so-called Bring Chicago Home referendum heading toward defeat — is a message that the public is not willing to support “blanket authorization” of spending without more details.

City officials told Council members the plan would be a “game-changer,” and — unlike Bring Chicago Home — wouldn’t require any tax increases. They also disputed criticism the bond program is a “blank check” and said the bonds would not diminish the city’s financial standing.

“This financing plan does not impair our ability to fund our capital improvement plan, to service our existing debt or to fund our pensions,” said Jill Jaworski, Johnson’s chief financial officer. “We do not expect this program to negatively impact our bond ratings, because we are pairing the debt with recurring revenues.”

Johnson’s plan, which requires Council approval, includes letting dozens of controversial, special taxing districts — which siphon tax dollars from the city’s general funds for hyperlocal projects — expire. The city would use the recouped tax money to pay for the debt, which is expected to total $2.4 billion over 37 years

The bond money would be split between the city’s Housing and Development departments. The Department of Planning and Development would use the money for neighborhood development grants, small-business support and job training. The Housing Department would use the money for the construction and preservation of affordable rental homes, home ownership preservation or the preservation of single-room occupancy structures.

The bond proposal outlines specific dollar amounts for each of those buckets.

City officials also stressed that bond funds would be restricted to uses outlined in the proposed ordinance with “any other spending … legally forbidden without a vote by council,” said Daniel Hertz, director of policy, research and legislative affairs for the housing department.

Programs that already exist but receive new funding through the bond plan would follow current criteria and may not need approval, officials said, but alderpersons would have oversight over newly created programs.

Still, several alderpersons said they wanted to have greater say over the purse strings when it comes to specific projects, even under existing programs.

“While you’re asking for an extended amount of purchasing power, I think that we got to have some check and balance,” said 28th Ward Ald. Jason Ervin, who chairs the Budget Committee. “There also needs to be some touchpoint back as to when the money is actually spent.”

Ald. Bill Conway (34th) said Friday he was still undecided on the plan and raised what he said were takeaways from voters’ and business groups’ opposition to Bring Chicago Home.

“The message was not that Chicago is against affordable housing or doesn’t want to help homeless [people]. It was, instead, really a rejection of a ‘first we get the money’ mentality,” Conway said. “I have grave concerns about a blanket authorization of this amount. I think we need to take a look at the size and scope of it going forward.”

Johnson’s Finance Committee chair, 3rd Ward Ald. Pat Dowell, dismissed criticism that the proposal is a “blank check” as off-base.

“This is not a project that has a blank check, a blank slate, attached to it,” Dowell said. “This is a program that has identified uses for both affordable housing and economic development.”

The taxpayer watchdog group Civic Federation has not published a position or analysis on the proposal. But in its analysis of the Bring Chicago Home policy, the group cited the bond proposal as an example of one with “more detailed descriptions of goals, programs, budget, impact and selection criteria.”

Alderpersons also raised concerns about the city’s outstanding debt, which is only expected to grow with rising costs and underfunded pensions. In 2024, paying off debt will make up about 17% of all city spending, with pension contributions accounting for nearly 23%, according to an analysis by the Civic Federation.

Jaworski put it bluntly to alderpersons: “We will need additional revenues.”

But she said the city is also at an inflection point with 47 TIF districts set to expire by the end of 2027 — and that investments in housing and economic development will help the city’s long-term growth.

“We have a lot of fixed obligations — existing debt, pensions, police and fire, our workforce here — but we have some room with other revenues to make a choice. Do we deploy it to those long-term fixed obligations? Or do we deploy it into things that are going to grow the city? And that’s what this really is about, is deploying it in ways that grow the city,” Jaworski said. “Because it will increase property value. We will get more revenue than what we’re projecting here. We’ll see more sales taxes. We’ll keep people here.”

“And our population will grow also,” Ald. Walter Burnett (27th) said.

“That is the hope. The biggest thing that could improve the city’s finances is more people living in this city,” Jaworski said.

Ultimately, Friday’s meeting indicated there may be broad support for the bond proposal on the Council. Even skeptical or inquisitive Council members started or ended their testimony with positive remarks, echoing the need for a plan as TIF districts expire.

But the meeting also made clear the Johnson administration will need to take time to respond to detailed questions from the Council, or otherwise risk complaints and potential failure over a perceived lack of transparency about the plan.

Community leaders from the Metropolitan Development Council, Far South Community Development Corp., Quad Communities Development Corp., the Illinois Housing Council, the Community Investment Corp. and others spoke as well.

Those leaders highlighted what’s seen as the strongest point of the proposal — a shift away from what many experts see as the city’s overreliance on tax increment financing districts.

TIF districts collect property taxes within set boundaries to fund projects within that area, siphoning those dollars away from other taxing bodies, like parks, libraries, schools and the city overall. Developers who want public subsidies to build are incentivized to do so in a TIF district, meaning areas without them can be less attractive.

“TIF funds are available in limited locations, and when other public resources are limited, the city may have to turn down promising and impactful developments simply because they fall outside of a TIF boundary,” said Allison Clements, executive director of the Illinois Housing Council.

But even community leaders who are eager to support the project said they’re hoping for more transparency and opportunities for input from the administration.

“These changes need to come with a major upgrade in the quality of our community process,” said Chris White, facilitator for the Citywide Equitable Development Roundtable. “When community leaders take time to come to public meetings about developments, they are not there to be window dressing. They are not there to be rubber stamped, they expect and demand good faith negotiations around what the community needs are.”

Friday’s meeting was just the first step in the legislative process for the bond proposal. No vote was taken. The plan would still need a committee vote and a vote by the full Council.

Mariah Woelfel and Tessa Weinberg cover Chicago government and politics for WBEZ.