NOBODY UNDERSTANDS TIFS

Chicago Alderman Walter Burnett (27th) resigned Wednesday as chairman of the City Council’s Black Caucus.  It was, according to the Sun-Times,  because there was "dissension in the ranks fueled by his demand to set aside 20 percent of the city’s tax-increment financing funds (TIF) for affordable housing."  So it seems like a good time to explain TIFs.

The only people who understand tax increment financing are those who know how to take advantage of it. Since normal people’s eyes glaze over when they try to comprehend the theory, they do not even bother to really try. Think of TIFs as a game of three-card Monte where only the dealer can hold the winning hand.

Simply explained, TIF districts are supposed to be created in distressed or blighted areas to encourage development. It is a method where future tax gains are used to pay for current improvements. The theory being that when an area is developed, there would be an increase in the value of the surrounding real estate so there would be increased tax revenues. The increased revenues are the “tax increment.” That future increment is used to pay for the past improvements done in the area.

Eyes glazing yet?

The City of Chicago is a leading city in creating TIF districts. There are 162 districts today, according to the Department of Housing and Economic Development’s web site  and hundreds of projects have been financed through TIF money.


Journalism students at Columbia College in Chicago have recently published an extensive list of TIF projects at their web site, Chicago Talks,  and have provided research on a city map of 171 TIF projects finalized between January 1, 2000 through July 30, 2010. It “shows more than half of the private-sector projects are clustered in or near the Loop. Few if any projects can be found in many of Chicago’s most economically distressed communities on the West and South Sides.” That makes no sense. Didn’t we just learn that TIF projects are supposed to be in blighted areas?


Chicago Talks analyzed public records of nearly $100 million in TIF spending and found ” about a dozen companies since 2000 that were authorized to receive tax-increment financing to move their corporate headquarters to Chicago or remain in the city:-CareerBuilder, $2.9 million in 2008-CB2, $3.4 million in 2010-CAN, $13.68 million in 2006-Green Works, $6.1 million in 2005-Grossinger City Auto Corp. Inc.'s Toyota and Scion dealership, $8.5 million in 2008-Mittal Steel Co., $2 million in 2008-MLRP Merlin LLC and Coca-Cola Enterprises, $3.22 million in 2006-Nanoink, $1 million in 2003-Navteq Corporate Headquarters, $5 million in 2010-United Airlines, $5.475 million in 2007-United Airlines, $25.9 million in 2009-USG Corp., $9.75 million in 2004-Sara Lee, $5 million in 2000-The Ziegler Cos. Inc., $2.4 million in 2008 Source: Records from the Chicago Department of Housing and Economic Development.”


Below is a list of some of their analysis of why TIF money was awarded:


*Green Works, a landscaping firm that was authorized to receive $6.1 million – or 89 percent of the total cost – for its headquarters at 551 N. Sacramento Blvd. to be built on the site of an illegal dump. No one from the company returned calls for comment.


* USG Corp. and Christiana Investors LLC, which has received about $7 million out of the project’s $9.75 million cost to help fund the construction of an 18-story office building at 550 W. Adams St. The company didn’t respond to requests for an interview.


* United Airlines, which won approval for two TIF subsidies totaling about $31 million to help fund its corporate headquarters at 77 W. Wacker Dr. and for its operations to move to Willis Tower at 233 S. Wacker Dr. United spokesman Mike Trevino said the company expects to create about 3,100 jobs because of the subsidies, though he notes about 600 of those jobs were transferred from Elk Grove Village.


‘That’s not how TIF money should be spent,’ said Rachel Weber, associate professor of urban planning and policy at the University of Illinois at Chicago. She said TIF money should not be given to companies to shift jobs from one area to another.


‘I think one of the more egregious uses of TIFs . . . is the subsidizing of corporate headquarter locations in the Loop,’ Weber said in September at a panel sponsored by the Better Government Association.”


A dedicated group of college students discovered these TIF subsidies. Their names are: Caitlin Bukowski, Ellyn Fortino, K. Herron, Becca James, Meghan Keyes, Tony Merevick, Margaret Smith, Taryn S. Smith and Mika Tatich. Dan Weissmann assisted with data analysis. Derek Eder created the searchable map.

When they graduate they will be looking for jobs; any media outlet should feel privileged to hire them. If they produce this kind of work as students, imagine how they would succeed as reporters.