Here are the mayoral candidates’ responses to our emailed question: As mayor, what would you do about TIFs?
The responses are published in alphabetical order.
Revamp the TIF program to focus on truly neglected communities. In 1983, the City of Chicago created the Tax Increment Financing (TIF) program to promote economic growth and increase the value of real estate in the City. However, in its current form, TIF is an arm of ward-based development and has helped create a Chicago of haves and have- nots. Furthermore, a good portion of the taxpayer-financed program has subsidized private developments at the expense of Chicago homeowners and businesses.
The time has come to revamp the TIF program to focus on truly neglected communities. The goal of TIF is to help create a rising tide of wealth for all Chicagoans. To achieve this goal, I will reform TIF as follows:
- I will have an analysis performed on each TIF District to determine once and for all if the public has benefitted, or if funding has simply rewarded private developers. This analysis will be shared with the general public.
- Future TIF funding will support the goals of my Comprehensive Economic Development Plan and the eight (8) Economic District development plans.1
- TIF funds will be used for economic development in neglected neighborhoods.
- TIF funds will be used to finance public infrastructure and facilities improvement projects in blighted areas, such as renovations of Chicago Public Schools, parks and open space projects at the Chicago Park District, and track and station renovations at the CTA.
- TIF funds will be used to help finance the extension of the CTA Red line beyond 95th I will work with the City Council to create an appropriate TIF district for the Red Line extension initiative and similar projects.
- TIF surplus funds will be designated for Chicago Public Schools, pension obligations and community development projects.
TIFs can be an essential tool in breathing new life into a neighborhood. The long-standing problem with TIFs is that many elected officials have used them as a slush fund for pet projects. That must — and will — come to an end when I become mayor. We will be more strategic and scrupulous in using TIF dollars by ensuring they are directed to long ignored neighborhoods in our city, and when combined with opportunity zone capital. TIFs will be an essential tool in rebuilding communities. This means we can build new train stations, libraries, schools, shopping and offices where they’re lacking. Surplus TIF funds must be returned to CPS and the other taxing bodies for their needs.
TIFs are a tool, and as Mayor, I will employ them as part of a coordinated strategy to drive economic development in the South and West sides. We must sync our public spending on things like infrastructure, parks, and new TIFs, with private investments through New Market Tax Credits, and Economic Opportunity Zones.
TIFs are part of this strategy, but they must be used transparently. I will improve reports to account for TIF spending across the city and focus on areas of the city that need help. Coordinated and bold investments are key to growing Chicago to 3 million people. We are also looking at additional reforms.
The City of Chicago has stretched its use of TIFs far beyond the stated purpose of spurring economic development in ‘blighted’ communities. TIFs, when used properly could actually be an effective tool to spur economic investment and growth. But the program lacks three major components: transparency, consistency and equity in its use, and accountability for how tax dollars are used.
Transparency: For a long time, I participated in the TIF Illumination project, an initiative that sought to educate residents in all 50 wards on how their TIF dollars are being spent (note: Tom Tresser, founder of CivicLab, launched the TIF Illumination project). That process involved teams of researchers reviewing hundreds of pages of TIF documents online to decipher the full details of each TIF district. Transparency is more than just dumping PDFs online. It also includes making information easily accessible and digestible.
The public should know both the individuals that make up the committee determining TIF allocation decisions, mandated public meetings in advance of any decisions to allocate TIF dollars, and data on how TIFs are used by ward — which projects/recipients, the terms of the agreement, and how closely the agreement to receive TIF dollars is adhered to.
There must be full City Council review of TIF funds during the budget approval process, and even aldermen should be properly educated on how TIFs are used in their wards. Public education is not just for the public, it should also be for public servants.Aldermen should be briefed on the ins and outs of TIFs if they are to be effective stewards of any TIF processes in their wards.
Consistency and equity in use: Last year, Chicago reported $146 million in TIF surplus. An equitable economy development plan would determine how to best allocate those funds to the neighborhoods in most need – communities that struggle to attract private investment.
Porting: This creative tactic is used by the city to steer TIF dollars to favored projects (i.e. the $55 million that was steered to Navy Pier for improvements). Unfortunately, porting rarely seems to go from TIFs flush with cash to those in blighted areas. Porting decisions should be approved by aldermen and if the city is committed to equity, TIF dollars should be steered to the community areas that are in dire need of economic investment.
Accountability: Follow through is a must for any entities receiving TIF dollars. Most recently, we had a big box retailer that closed stores on the South Side of the city while opening up stores on the North side, all while requesting public dollars. Public dollars must be tied to public benefit – meaning the number of jobs created, quality wages and working conditions for companies receiving public dollars, etc. And if those sorts of criteria are not met, the city should have a clawback provision to recoup public dollars that have been spent.
From my standpoint as an economic development professional, TIFs can be an effective tool for economic development but it requires us to actually steer the public dollars to the communities that need it most. The program must be transparent and subject to oversight that fosters accountability for how those dollars are used. That is the only way to have an economic development process with integrity and that equitably allocates our city financial resources.
Chicago is overrun by TIFs which drain property taxes from essential services such as schools, parks and social services, often with the money subsidizing private developers. TIFs were originally designed to improve blighted areas by attracting construction and jobs, but they have turned into a slush fund for the Mayor.
TIFs exploded in the 1990s and 2000s to claim more than $6 billion from city property taxes. In 2017, Chicago had at least 143 TIFs covering one-third of the city that devour $660 million each year that should pay to educate our children and for the care of our most fragile citizens.
Our central business district is hardly blighted. Yet, the Loop, Near North Side, Near South Side and Near West Side have taken nearly $1.28 billion of the $2.25 billion in TIF dollars spent from to Only $4.8 million was spent collectively in Pullman, Riverdale, Roseland and West Pullman, far South Side communities where blight is prevalent and economic development scarce. In addition, according to reports, tens of
The TIF process is fundamentally broken, which is why I will call for an immediate moratorium on any new TIFs. If we freeze the TIF program, it will allow us time to conduct a complete audit to find out exactly where our money has gone and what the benefits are. This audit should be done by a completely independent body and be made public, giving independent experts, media and the people of Chicago the ability to weigh in on the best uses of this money.
Mayor Rahm Emanuel promised his administration would be “more accountable, open, and transparent” than any other administration. The TIF Data Portal on the City’s website, while a beginning, falls far short of anything most people would call transparency. Independent research has shown millions in unaccounted for money, and the Department of Planning has not answered demands to account for these dollars. I will call for a complete overhaul of the system to ensure true transparency.
Meanwhile, estimates say the City may currently have $1.4 to $1.7 billion in unused TIF funds. I will declare a TIF surplus with the vast sum that is not committed to any specific projects or debt. That money could then be used to reopen our mental health clinics, shore up some of our school budgets, make a payment into our beleaguered pension fund, turn some of the closed schools into community centers that drive economic development and begin meaningful neighborhood economic development programs.
I would support the use of TIF funds with local support to assist in creating development and jobs in our communities. Thoughtful development can put vacant properties and parcels back on the property tax rolls, simultaneously generating tax revenue, creating jobs and fostering safe streets and strong neighborhoods. The first step in addressing our city’s financial crisis is to use TIF money for its original purpose: lifting our least-developed neighborhoods out of blight and poverty to create opportunities across all of our communities.
LA SHAWN FORD
As mayor, I would start with a moratorium on TIFs. The statute must be amended in Springfield with public hearings to improve the current law. We must add protections against the current abuses that continue gentrification in parts of the city while ignoring development and job opportunities in the hardest hit communities. We must ensure that there is equity in the utilization of TIF dollars by local small businesses in the tax districts.
TIFs has been corrupted since Harold Washington died. We must abolish TIFs creating a new financial tool linking the development from downtown to the south, west, and east sides of Chicago. Abolishing TIFs would cause for a flush that would give millions to CPS, Park districts etc. The new fund would be called the DBE (Downtown Benefits Everybody) fund. We would create DBE districts in only impoverished communities. Instead of funding these districts by freezing property taxes we would fund them by imposing a special tax on development projects downtown, take a small portion of the sales tax, and a percentage of the lasalle street tax after we find the loophole to get it passed.
TIFs can be an important economic development tool, but in Chicago it is clear that there have been abuses. The current lack of accountability and transparency in the TIF process is a tremendous problem that the next Mayor must identify as a priority. As Mayor, I would conduct a comprehensive review of the TIF process, including public input, to ensure that TIF dollars are only being used for their intended purpose.
TIFs were intended to be used for blighted areas, however, they were not used for blighted areas. For example, millions of dollars were spent in the Willis Tower and Block 37, both located in downtown Chicago. What we have seen is neighborhoods being ignored, namely those on the South, Southeast, and West sides of our city. Our residents continue to feel disenfranchised due to the lack of investment inside of their neighborhoods. As a result of the abuse of the TIF funds, the areas that received the benefits of TIFs look beautiful, and the ones that were ignored are filled with empty lots and boarded up storefronts. This has resulted in violence pouring in all across the city, generational families moving out of Chicago, and the machine style of politics staying intact. If TIFs are still available, which we need to reassess to see if any funds remain, then we must invest in our neighborhoods throughout the City of Chicago, and not just downtown. I will redirect the funds to go to areas for its intended purpose — blighted areas. This will result in all of Chicago being treated fairly, funds going directly inside of neighborhood for long-term investments, and we can thereby aid in reducing the violence in our streets.
Chicago must bring real transparency to all aspects of tax increment financing (“TIF”), an economic development tool that diverts more than $650 million in property taxes annually.
When I am mayor, the city will not create new TIF districts until we have fully analyzed the performance of existing districts to ensure that they are meeting their intended objectives and that private recipients of TIF funds are satisfying their contractual obligations. The city will set performance thresholds for each TIF district, and each district will be reviewed at least every five years to determine whether those thresholds are being met. If they are not being met, then the city will, after soliciting public input, determine whether to close a district, revise its objectives or make other changes. In addition, the city will impose penalties on private recipients of TIF funds that do not meet their contractual obligations.
Before any new TIF is created, the city must strengthen the standards for determining whether a district qualifies for TIF. The city will no longer loosely apply the test for determining whether an area is “blighted,” and it will raise the bar for clearing the “but for” test, which requires one to show that private projects and investment would not happen without TIF investment. Only then will the city consider creating new TIF districts that meet these more rigorous standards.
For any new TIF district, the city will clearly describe the justifications for creating the TIF, and it will do so in publicly available documents and in town hall meetings in the proposed district where citizens can provide input. In addition, the city will closely monitor private developers to ensure they are meeting their obligations under redevelopment agreements, including those related to job creation and minority and women business enterprise requirements. If a private developer fails to meet its obligations, the city will enforce penalty provisions contained in the redevelopment agreement, including clawing back TIF funds.
I will address additional TIF-related reforms as the campaign progresses.
Chicago’s rising property taxes are not translating into better services and quality of life for Chicago families because the mayor and the city council use Chicago’s TIF program as their personal political slush fund, splurging on flashy downtown development at the wholesale neglect of blighted communities. Schools are closing, violent crime is rampant and the communities most in need of reinvestment are carrying the tax burden while experiencing the very worst of these plights. This is not fair.
We can stop the inside trading by allocating TIF funds to address our most serious challenges, like reducing property taxes. We can usher in a new era of fairness by ushering out the era of political spending that only benefits the friends and allies of powerful politicians. As mayor, I will audit our TIF program to achieve full budget transparency and ensure TIF funds are used to build up blighted communities and reinvest in the future of Chicago’s neighborhoods.
Reallocating TIF funds to address critical funding priorities:
- Implement a $400 million property tax cut by reallocating 30% of Chicago’s $1.4 billion currently sitting in TIF funds back into the corporate treasury.
- Restore City retirees’ healthcare by reallocating $130 million of TIF funds to pension benefits.
- Transfer up to $500 million in TIF surpluses from affluent communities into TIFs in poor communities to combat blight and poverty.
- Restore the $276 million back to Chicago Public Schools that was siphoned away by TIFs.
In 2017, the top ten TIFs collected a total of $238 million in property taxes. These TIFs in downtown and city center communities are currently holding $583 million in property taxes as of January 1, 2018. The Kinzie TIF alone is holding $97.3 million in unused surplus. At the start of 2018 there was $1.4 billion dollars sitting in Chicago’s various TIF funds.
As we work to expand economic development funding tools under the constraints of reduced state funding, TIF programs have an important role in building the next generation of infrastructure, schools and a diverse workforce. But we must make the program more transparent and more accountable. To start, I would set clear rules that prohibit profitable corporations and developers from accessing public funding as an incentive to move downtown. TIFs are meant to improve public assets, like infrastructure and schools, not to serve as giveaways to wealthy corporations shopping around for new office subsidies. I would also build on the existing TIF web portal to list projects under consideration for TIFs, instead of just projects that have already been approved. This will ultimately give the public the opportunity to scrutinize deals and offer input before they are complete.
Preckwinkle wants the annual TIF surplus earmarked exclusively for CPS, instead of giving city government a cut of that money. That would continue until all 144 TIFs are abolished, if she is elected mayor.
“About a third of our property taxes go into TIF districts. We’ve really got to look at unwinding as many of those TIFs as we possibly can and turning the resources back to Chicago Public Schools,” she told the Sun-Times.
The City needs to implement a new paradigm for using TIF funds to support new development and its TIF program. Large-scale redevelopment projects, essential for the City to thrive, need to have clearer TIF guidelines for developers and also should provide opportunities for the City to leverage that growth to help poor and long-neglected communities. Furthermore, the new paradigm needs to provide taxpayers with the transparency to clearly understand how their taxpayer money is being used.
The critical components of that paradigm are as follows:
- Existing successful TIF’s should be evaluated for possible accelerated expiration so that local governments and schools can reap the benefits of an expanded tax base.
- A minimum of one-third of all TIF proceeds should be dedicated to a Chicago Equity Investment Fund (CEIF) to provide capital for investment in blighted areas of the City, with priority given to the 133 Federally-designated Opportunity Zones (see my previously released Economic Development Plan).
- TIF revenues and other City subsidies and grants to businesses and developers should be in the form of an “equity investment,” allowing the City to realize a return on its investment that can be used for future investments.
- Full transparency in the drawing of TIF’s to ensure that they are being drawn in a way that does not divert “existing” property tax revenues away from the schools and other local governments, which only increases taxes on other taxpayers.
- Full transparency on what TIF proceeds will be used for, and protections and security to ensure that developers and businesses that receive direct or indirect City support live up to their commitments (avoidance of another Target store controversy).
This new paradigm for TIF investment will not diminish development, but will provide a structure to ensure greater transparency and accountability in City investment, while also ensuring benefits are shared in poorer communities.
Everyone knows and many say that the TIF dollars are taken from the communities tax base and funneled into downtown and a few neighborhoods favored by Rahm, directly at his own discretion. I would call for a forensic audit of the program, but such examinations have yet to materialize. The mayor and his staffers who handle the TIF program fight requests to release information clarifying the way TIF funds have been expended.
I would stop plowing all that money into downtown, the riverwalk and the tourist areas and redirect those funds back into the blighted neighborhoods that they were intended for. This will also create new jobs and opportunities in those areas that will help reduce violence. These funds were designed to help the poorest communities and should be used for the ideas above. My more extensive 10 point plan for chicago contains these ideas as well as additional ideas on how to increase revenues, without raising taxes, to fund all of my initiatives….
It is no mystery, if you pass through a neighborhood where residents have jobs, the business community flourishes, where the unemployment is high, stores are vacant, schools are closed and young men are in the streets foraging for a way to survive, by whatever means. Everyone must eat and they will do what they must, not always by choice, to feed their families. We must put resources into the roughly eight communities that are indeed, ‘blighted’.
ROGER L. WASHINGTON
I agree with and support the initial intended mission of TIF dollars being used for the purpose of helping to induce economic development in blighted areas of Chicago. However, the problems arise when our officials are not 1) transparent with the use of TIF financing and 2) when TIF dollars are used to benefit projects or districts that are not facing dire economic conditions. In the case of Marshfield Plaza on the Far South Side of the City, TIF funds were able to provide a significant jolt of economic development to an otherwise forgotten and financially devastated community. This is a good example of the positive benefits of the use of TIF funding to help impoverished communities. However, when TIF funds are funneled to benefit special projects such as enhancements at Navy Pier and to benefit other projects that do not fit the description of financial hardship, I believe that TIFs should not be used in this fashion. Certainly, the public should be clearly informed concerning the use of TIF dollars because ultimately, they will have to be responsible for the total debt that is assumed. In short, TIF financing should only be used in accordance with its original, initial intended purpose of helping areas facing significant economic distress, and not diverted towards special projects for wealthy businesses.
Finally, complete transparency helps to prevent misuse of TIF dollars by allowing the public to be aware and to challenge the intended use of TIF dollars before appropriated.
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