Mike Quigley, Cook County Commissioner, 10th District

City's taxing trick siphoning away millions; Tax increment districts put cash under mayoral control

Chicago Sun-Times

November 18, 2007

By Mark Brown

The real estate tax bill mailed recently to Mayor Daley's Prairie Avenue town house looks pretty much the same as the one sent to everybody else in the city of Chicago, with an itemized breakdown of how much each taxing district will receive from his $13,056 total payment.

The billing statement from the county treasurer indicates more than half the mayor's total bill -- $6,641 -- will be directed to the Chicago Board of Education, with the next largest amount, $2,492, going to the City of Chicago.

The itemization continues all the way through the city Library Fund, which, according to the bill, will receive $123 of Daley's taxes this year. All the money is allocated along the same percentages applicable to every Chicago homeowner.

But the mayor's tax bill differs from most other taxpayers' in one important aspect: The itemized list of where his tax money goes is a total fiction.

It's incorrect, not even close, bears no resemblance to reality.

That's because the mayor lives in what's called the Near South Tax Increment Financing District or TIF, which allows the city to capture in a special fund any increase in total real estate taxes paid from that area.

Cook County does not show the impact of TIF districts on its tax bills. In the case of Daley and his Central Station neighbors, that's quite an omission.

$13 GOES TO LIBRARIES

More than 89 percent of the mayor's tax bill -- or $11,653 -- will be siphoned off this year by the Near South TIF. Only $1,403 will remain to be divided among the other governmental bodies.

That means that instead of $6,641 of the mayor's taxes going toward running the schools, it's more like $713.

Instead of $2,492 toward city operations, it's closer to $267.

Rather than $1,231 that the mayor's tax bill says he's sending to Cook County to run the public hospital system, courts, jails and all the rest, he actually contributes about $132.

And the libraries of which we heard so much during recent city budget talks? They'll get about 13 bucks from the mayor, not $123.

Am I trying to tell you the mayor is paying less than his fair share of taxes?

Not at all. He's paying full freight.

I'm just trying to draw your attention to the financial impact of TIF districts by using the best example at my disposal.

It's not just 89 percent of the mayor's real estate taxes going into the TIF. It's 89 percent of everybody's taxes in his particular neighborhood tax code.

That adds up.

The Near South TIF, which runs from Congress south to 21st Street between State Street and Lake Shore Drive, will soak up $41.5 million in property tax dollars this year alone.

$217 MILLION COLLECTED SINCE 1991

Since the Near South district was started in 1991, it has collected $217 million, making it the second largest revenue-generating TIF in the city, according to a report last week by Cook County Clerk David Orr. I figure that could triple before the TIF is due to expire in 2014.

For the mayor alone, he's paid $136,293 in property taxes since his home went on the tax rolls for 1994, of which $82,265 went into the TIF.

If you know the area, then you realize it's where all those luxury high-rises are popping up across from Soldier Field, a whole new neighborhood sprung from what was once a rail yard.

The city will tell you that's what makes this a great example of why it uses TIFs. By capturing the tax revenue and investing it in the Central Station project, the city was able to jump-start a run-down area into one of its hottest places to live.

Rather than argue the real estate realities, let me just point out that it's also what makes it a great example of why you look around the city and see all this development and can't figure out why the city and other agencies need to raise taxes.

SUBSIDIES FOR DEVELOPERS

The tax money generated by the new buildings -- and lots of the old buildings -- is going into TIFs to subsidize developers, such as $18 million from the Near South TIF going to rehab the old Blackstone Hotel and $2.3 million for mayoral pal Allison Davis (sometimes partner of mayoral nephew Robert Vanecko) to turn the old Roosevelt Hotel into apartments.

The biggest single dollar commitment for the Near South TIF, though, is $67 million to build the new William Jones High School in the neighborhood.

Who decides how all this money is spent? Well, that brings us back to the mayor. He and his staff decide.

The county is working on putting TIF information on tax bills. That would be a good first step toward entirely rethinking this economic development tool.

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