PHOTO/SARAH JANE RHEE
CHICAGO — Looking at Chicago’s Tax Increment Finance districts is like staring at a spider web. Both are elegant, complex, and sinister: seems like there is more here than meets the eye. Unless you are a predator, nothing good can come from this.
That lengthy name is usually shortened to “TIF.” The acronym helps diminish what for many is an instinctive aversion to tax policy discussions. Often, Chicago politicians and their benefactors who access TIF funds insist the citizenry lacks the specialized knowledge to understand how it all works.
The biggest secret is that, like a spider’s trap, the elaborate structure of TIFs serves just one simple, often brutal purpose.
Chicago TIFs occur when politicians designate an area of the city, for a 23-year period, a property tax TIF district. That section pays its property taxes as usual. Once the district is created, the tax dollars above the amount paid when the district began go into a special fund. The diverted funds, since taxes typically rise each year, quickly add up, while property taxes that would go to public schools are frozen.
According to the latest available figures (2011), there were almost 1.4 billion dollars in Chicago TIF accounts, even as the City claimed a budget deficit of over 630 million dollars.
TIFs were intended to spend the diverted funds for economic development in “blighted areas.” The criterion for funding is in theory something called “but for”: a TIF award should only be made if the project would not occur “but for” the TIF contribution.
Control of the funds, which many feel should rest with the communities whose taxes are diverted, was instead shifted to the mayor’s office. Accounting for the funds is made difficult, since the amount of tax property owners pay into the TIF fund is not shown on their tax bills. What portion goes to the TIF is, incredibly, listed on the tax bills as “0”.
Because of the dogged efforts of a few local reporters, most notably Ben Joravsky of the Chicago Reader and the non-profit Civic Lab’s TIF Illumination Project, we now have some idea of where that money has gone. Here are some examples of the TIF dole:
Mayor Rahm Emanuel recently announced that he had gifted 55 million dollars to Depaul University, a private religious institution, to build a sports stadium.
A few years back, about 47 million went to Jesuit Loyola University.
The downtown block that includes the Sears (now Willis) Tower, was deemed blighted so the Tower could siphon off 37 million in TIF dollars.
There are now 167 TIFs in Chicago, diverting an estimated 1.5 billion dollars.
Schools beg for toilet paper, while the Pritzker hotel empire receives TIF money! Here is the key point: TIF districts make worse an already inadequate method of funding schools by diverting money from public projects to private capital developments, closely guarded by the mayor’s office, which continues former Mayor Daley’s policy of targeting most TIF funds to politically connected, often wealthy entities.
