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Abuses of TIF program abound, says Cook County CommissionerNear West GazetteNovember 2, 2007By Gail MansfieldSince tax increment financing (TIF) was first introduced in Chicago in the 1980s, the City has created more than 140 TIF districts. Designed to “encourage development and investment where it would not otherwise occur,” according to the City’s Department of Planning and Development (DPD), TIF is a mechanism that allows municipalities to earmark tax revenues from increased property values within a TIF district in order to finance further development in that same area. According to the DPD, TIFs have generated $8.3 billion in private investment; created or retained 66,000 jobs; built 17,000 residential units; and created or rehabbed 35.2 million square feet of commercial, industrial, and office space. While Cook County Commissioner Mike Quigley agreed TIF can be a useful economic development tool, he said abuses of the program abound. In a report issued earlier this year, A Tale of Two Cities: Reinventing Tax Increment Financing, Quigley argues TIFs do raise property taxes; frequently are used in areas not suffering from blight, such as the central business district; and harm units of local government such as counties and school districts that rely on property taxes for substantial portions of their revenues. In addition, Quigley noted, TIF critics say the process suffers from “a lack of comprehensive planning, weak oversight, poor documentation, and significant barriers to public participation.” City TIF use explodes Though TIF has become the preferred economic development tool in hundreds of Illinois towns and cities, it is especially popular in Cook County. In 2005, 373 TIF districts existed countywide, creating more than $686 million in property tax revenue, which nearly matches the county’s entire 2005 property tax extension of $720 million. Two-thirds of the county’s municipalities had at least one TIF in 2005, and Chicago alone had 136, representing more than a quarter of the city’s total acreage. Chicago taxpayers paid more property taxes to TIF in 2005, $386 million, than they did to Cook County. Among the findings of Quigley’s report: TIFs effectively are excluded from the City’s operating budget; several areas of Chicago in which TIFs were created have failed to grow more than similar non-TIF areas; TIF districts consumed nearly ten cents of every 2005 Chicago tax dollar; the wording of TIF legislation has lost Cook County local governments nearly $700 million due to inflation; and TIF accounting is minimal and difficult for outsiders to decipher. In addition, the report charges, the Community Development Commission (CDC), which oversees the TIF program, exercises little real oversight. “Of 812 individual votes cast since November 2005, 808 have been yeas,” the report stated. “None of the items that have come before the CDC since November 2005 has been voted down.” Recommendations for reform “If TIF really is ‘the only game in town’ [for economic development], then these findings are deeply troubling,” Quigley commented in the report. Quigley and his staff have made several recommendations for TIF reform. They urge proposals for new TIF districts to include a study of the potential impact on all affected local governments, ask that TIF information be included on property tax bills, and suggest that the Illinois General Assembly reform TIF legislation to protect local governments from the effects of inflation. Other recommendations include inserting TIF into municipalities’ annual operating budgets; requiring TIF redevelopment plans to include specific goals and budgets, subject to periodic review; and making TIF maps, plans, budgets, and redevelopment contracts available to the public online. The report also recommends abolishing the CDC and establishing neighborhood-level institutions to govern and oversee TIF. Best of times, worst of times Illustrating the report’s title, which refers to Charles Dickens’s novel set during the French Revolution, A Tale of Two Cities: Reinventing Tax Increment Financing lays out what it calls the winners and losers under the current TIF program. Quigley told the Gazette that next steps include introducing legislation at the county level; he also hopes for statewide action and support from some members of the City Council. “I think we will succeed in getting this information onto tax bills and into the city budget, and that will probably be enough to force other changes,” he said. “Once more people know about it, they’re going to want to know why one person [the mayor] has control of about $400 million in property taxes. Since the CDC is appointed by the mayor, basically he has complete control.” It is the best of times for the Loop and its thriving TIFs; the City of Chicago, DPD, and Mayor Richard M. Daley, whose virtually total control over TIF expenditures allows them to establish TIFs at will; and the interests benefiting from the current TIF system, particularly those in already booming areas of the city. It is the worst of times for neighborhoods whose TIFs are inspiring virtually no economic growth; for local governments whose revenues are hurt by TIFs; and for Cook County taxpayers, “who foot the bill for TIF districts to the tune of hundreds of millions of dollars a year, yet are provided with very little information on their operations, finances, or effectiveness,” the report said. The report’s conclusion: “It is time for a revolution in accountability and transparency in tax increment financing.” To read the report, visit www.commissionerquigley.com/tif.shtm.
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