By Chris Katsaros and Darius Vinesar
Posted: Tuesday, Dec. 17, 2019
Grassroots activist Tom Tresser pointed at a map of Chicago and said, “No other major city in America has this kind of...infection.”
“It's what it is, an infection.”
What Tresser was referring to was tax increment financing.
The practice of tax increment financing, or TIF, originated in California in the early 1950’s. Since then, TIF legislation has found some kind of use in every state except Arizona. TIF is used extensively in the Midwest, especially in Chicago for projects such as the 78 and the developments at Lincoln Yards.
The Chicago Teachers Union began a 14-day strike on Oct. 17. One of the areas where the teachers were protesting was Lincoln Yards.
Lincoln Yards is a development by Sterling Bay located between the Lincoln Park and Bucktown neighborhoods. The company claims on its website that it's a “leader in identifying and creating urban campus opportunities.”
StoryMap: 10 expensive TIF projects in Chicago
On April 10, the city approved up to $2.4 billion in public subsidies for Lincoln Yards. The city also approved $490 million in TIF-eligible projects in the area.
The CTU chose to protest at Lincoln Yards because it believed that Chicago Public Schools and Mayor Lori Lightfoot had money to spare that they were choosing not to allocate to teachers and resources for students.
“CPS is not broke” said CTU on its website. “The mayor could also redirect public dollars from her TIF slush fund — including $1.3 billion in TIF money Lightfoot approved – in a contract, in writing — for Lincoln Yards’ wealthy developers to create an upscale new neighborhood in “blighted” Lincoln Park, one of the wealthiest neighborhoods in the nation.”
David F. Merriman, the leader of IGPA's Working Group on the Fiscal Health of Illinois and professor at the University of Illinois at Chicago, said, “People often treat the TIF money as if it’s a bank account that the mayor can draw on without constraint. Sometimes, particularly in the heat of a strike, it makes a good slogan to talk about all the money that is in TIF.”
However, some experts say TIF projects—and the way they relate to the CTU—are not being viewed correctly.
Professor Rachel Weber, director of graduate studies for urban planning and policy at the University of Illinois at Chicago, was asked if she thought the teachers union was justified in protesting at Lincoln Yards and demanding that that money be reallocated to the CTU.
“There’s no that money to be reallocated,” Weber said. “It’s money that will hopefully be generated in the future. So, it’s not like there’s a transfer of existing funds from one account to another, from CPS to a private developer. TIF works on the prospect of future property taxes.”
Weber added that CTU has been justified in recent years in pointing out the hypocrisy of the city. A substantial amount of public assistance has been given to private developers, and while the city has tried to help CPS, it has not been enough.
“I think the strategy of CTU was to point out the priorities of the city, how they were not necessarily aligned with the interests of the school,” she said.
In her Oct. 23 budget address, Lightfoot said that her budget plan makes “key reforms” to TIF in Chicago.
“My team has undertaken a detailed review process to reform TIF and align it more closely with our economic development needs, and our values of accountability and transparency,” she said. “The days of the TIF slush fund are over.”
Although Lightfoot’s plans concerning TIF may evolve and become clearer over the coming months, Merriman, who served in one of Lightfoot’s transition committees, said two TIF reforms are being proposed to the administration.
“One of those [reforms] is more modesty about the use of TIFs, which was started under Mayor [Rahm] Emanuel,” Merriman said. “The second is an attempt to use TIF in more needy neighborhoods--the West Side and the South Side -- and less emphasis on the North Side and maybe downtown.”
However, activists such as Tresser who have been fighting TIF for years don’t believe that simply reforming the practice is enough, much less making the process more “transparent.”
“TIFs are in direct succession to a long line of oppressive policies, starting with chattel slavery,” Tresser said. “That’s how bad it is. That’s how we call it out. That’s why we say TIFs cannot be reformed. You can’t reform slavery. Could we have slavery that was transparent? That’s offensive to even think about.”
Tax increment financing is a development tool that can be used to encourage economic growth in areas that are considered “blighted,” or in need of restoration and renovation. These are areas that would otherwise remain economically stagnant, “but for” the revenue that TIF would produce.
“The property tax revenue collected on the increase in assessed values in the [TIF district] will go into a special pool of funds,” Merriman said. “And that pool of funds is used only for economic development and only in the designated area.”
According to the City of Chicago, these TIF districts and projects must be created in areas with “blighting factors” such as excessive vacancies, dilapidation or deterioration, inadequate utilities, and more.
The ultimate goal of a TIF is to create economic development in the area its approved in, otherwise developers would not receive subsidies for the work they do. Because of this, TIF has proven for years to be an efficient and profitable tool for cities and developers alike.
Still, opponents of TIF, like Tresser, who created the TIF Illumination Project, continually criticize the system, going as far as to call it an “infection,” a way for cities to indirectly perpetuate racism and gentrification in Chicago’s neediest neighborhoods.
According to a 2009 report from the Chicago Reader, millions of TIF dollars were going to be spent on Willis Tower rehabilitation, subsidies for private hospitals and Fortune 500 companies during Mayor Richard M. Daley’s administration.
This was money that wasn’t going to show up in the official city budget. The Chicago Reader called money that TIF districts were making “a shadow budget.”Under Emanuel, a task force was created with the goal of reforming the practice of TIF. However, a joint investigation by the Better Government Association and Crain’s Business Chicago found that Emanuel’s administration signed off on a behind-closed-doors $55 million renovation for Navy Pier using TIF money.
Merriman noted that there are many TIF projects outside of economically vibrant areas. However, there is a notable gap in the success of TIF projects in different areas of the city.
“The most expensive and successful TIF [projects] -- in terms of generating revenue -- have been in the Loop, near the Loop area, or on the North Side, where the economy is doing relatively well,” Merriman said.
Merriman has proposed a counterplan to TIFs, with his approach: “funding infrastructure together,” or FIT.
“It seems to me that TIF stands the process of economic development on its head. We really should be doing almost the exact opposite of TIF,” Merriman said. “If the revenue is being generated in the west side and downtown, and what we’re concerned about is equitable growth for the whole city, maybe we should take some of the revenue that’s being generated there, and put it into the areas that are the most needy.”
Google Trends search data show connections between Lincoln Yards, TIF, and Mayor Lightfoot
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