Latest Post | Last 10 Posts | Archives
Previous Post: Little Lip’s tangled web *** Updated x1 ***
Next Post: Blagojevich signs on to greenhouse gas agreement
Posted in:
* Unreal…
The city this year will collect more than a half-billion dollars in property taxes from little-understood but fast-growing tax-increment financing (TIF) districts — six times as much as the controversial tax hike that won narrow approval Wednesday in the City Council.
A report issued Thursday by Cook County Clerk David Orr said the take from Chicago’s TIFs for the tax year for which bills just went out is $500.4 million. That’s $114 million more than last year, a 29% increase, and represents more than a tripling compared with just five years ago.
* Just how big is this pile?
For instance, revenues from just the two largest of Chicago’s more than 100 TIF districts will exceed the $144 million in property taxes Cook County will spend on its network of public hospitals and health clinics.
* And how much has it grown?
After averaging $60 million in annual growth between 2001 and 2005, TIF revenues exploded by $114 million between 2005 and 2006, 57 times the roughly $2 million the entire program took in 20 years ago. The city’s total take since the first TIF was created in 1984? $2,534,701,105.72.
* The Civic Federation has one idea to help deal with this situation…
The federation wants TIF spending to be included in the annual city budget, rather than handled in isolation on a case-by-case basis.
What we have here is an off-budget account controlled almost soley by Mayor Daley. That money could go a long way towards solving a lot of problems, including the CTA and, in Cook County, the public hospital situation. Instead, it’s used for other stuff, like “creating jobs”…
(A)ccording to a recent article in Crain’s Chicago Business, city officials are proposing to fork over a $40 million TIF handout to CME Group Inc., the combine created when the Chicago Mercantile Exchange bought out the Chicago Board of Trade.
As part of the merger, CME plans to fire over 400 employees […]
In this case, the city’s effectively offering CME $100,000 property tax dollars for every job it eliminates.
* TIF districts, which allow municipalities to siphon off all income from property tax growth from schools and other governmental units into tightly controlled accounts, can do a lot of good. But they’ve obviously gotten way out of hand and need to be reined in. With a huge percentage of the city now within TIF districts, taxpayers can expect a whole lot more tax increases in the future and/or reduced services.
* More city tax and budget items…
* Southwest OKs Daley plan to privatize Midway
* Big step toward privatizing Midway
* City to pour on pitch for tap water
* Sun-Times Editorial: City sold on reusable water bottles
posted by Rich Miller
Friday, Nov 16, 07 @ 9:57 am
Sorry, comments are closed at this time.
Previous Post: Little Lip’s tangled web *** Updated x1 ***
Next Post: Blagojevich signs on to greenhouse gas agreement
WordPress Mobile Edition available at alexking.org.
powered by WordPress.
I agree that giving CME $40M is a stupid waste of money, but the Reader goes to far when it says: “In this case, the city’s effectively offering CME $100,000 property tax dollars for every job it eliminates.”
The obvious concern was the ICE outbidding the CME and bringing the bond trade money to Atlanta (and incidentally costing a lot more than 400 jobs). In turned out that the incentive was unnecessary.
Story seemed to miss the big picture, despite making the right conclusion.
Comment by Greg Friday, Nov 16, 07 @ 10:14 am
That $114 million would more than cover the property tax hike.
Did anyone else see Blago’s veto of a property tax bill a week or two ago? I think it was Senate Bill 1400, but it isn’t coming up online, so I am not sure.
He added a requirement that the TIF money be included in a line item on the local property tax bills.
I wonder if it is the start of a trend…
It would be a good trend.
Comment by GoBearsss Friday, Nov 16, 07 @ 10:28 am
TIFs can be an effective economic development tool, but Daley is ruining it through these excesses. To siphon those kinds of dollars from City, County, and school coffers, and then to complain to Springfield that these entities need more funding is disingenous, at best.
There’s another wrinkle to the TIF saga that no one has written about:
The existence of TIFs presents a massive barrier to any proposal for a property-income tax swap. If the state actually does attempt to do a massive taxation/school funding overhaul, the TIF bondholders are going to want to know how the bonds will be repaid. That is, if the school funding formula comes to rely upon state income taxes instead of property taxes, the property tax burden will fall. But will the thousands of TIF bonds out there allow for the increment to come through an income tax swap - unlikely. Will the continued existence of TIFs negate the impact of the swap so that the “swap” itself will merely feel like an increase in income taxes with no corresponding decrease in property taxes. Maybe the answer is obvious and I’m just not seeing it.
Seems the better approach is to go the way of Arizona and prohibit local entities from offering any incentives because the bidding wars are cannabilistic and just lead to corporate welfare.
Comment by phocion Friday, Nov 16, 07 @ 10:36 am
Looks like the good middle class citizens of Chicago have been snookered again by Da Mare and his political and business cronies. Probably too late to take back that property tax increase.
As to the 400 fired employees, welcome to the modern marketplace, run by powerful wealthy business interests and powerful wealthy elected politicians and their families. Including the alderpeople who voted for the tax increase (or effectively didn’t oppose it) of course. Streams of money coming their way, no doubt.
Comment by Cassandra Friday, Nov 16, 07 @ 10:36 am
Interestingly enough, I recall reading that CME and CBOT gave Daley something like $100,000 in campaign contributions this year.
Mayor Daley? Corrupt? Nah…nothing to see here.
TIF’s have got to be frozen and the needs to be totally rewritten. TIF’s are choking the schools, the parks, the county. All so that Daley has his little Olympics slush fund.
Comment by jerry 101 Friday, Nov 16, 07 @ 10:45 am
Cassandra,
Tons of bot employees made a ton of money on the ipo–well more than their annual salaries. They, of all people, probably understand the “modern marketplace.” Just as you accept the pros and cons of working for govt, we who work in the capital markets understand that we have zero job security. Shall we get nostalgic and legislate that the pits shall last for another 100 years?
Comment by Greg Friday, Nov 16, 07 @ 10:47 am
By the way, Cassandra, I use “you” in the general sense, not implying that you’re a public employee. Based on many of your comments, I assume you aren’t.
Comment by Greg Friday, Nov 16, 07 @ 10:49 am
TIFF’s were intended to reinvigorate blighted areas. Instead, they are being used to subsidize favored developers and overly enrich municipal coffers at the expense of school districts and other taxing bodies. While I do understand the argument that without the growth (allegedly) provided by the TIFF, the school districts wouldn’t receive additional funds anyway, the fact remains that most of these non-blighted areas would be developed anyway because, let’s face it, God isn’t making any more land.
This problem is hardly localized to Chicago. Many, if not all, suburban municipalities have hopped on the TIFF abuse bandwagon. If I see one more townhouse development go up in a non-blighted suburban area on a TIFF, I’ll puke.
Comment by Snidely Whiplash Friday, Nov 16, 07 @ 11:27 am
Don’t assume that the way TIF is used in Chicago is in any way like the way it is used in the rest of the state. One of the differences is that Chicago does many small TIFs and another is that Chicago leads the state in the number of TIFs set up under the “conservation” rather than “blighting” criteria.
Also, don’t be so quick to assume that TIF has a large impact on school funding. The Department of Revenue paid a group of researchers at UI-Chicago to look at just this question, and their results showed little to no impact, particularly when compared to the impact of such things as tax caps and various property tax exemptions passed by the General Assembly.
This study is now almost two years old and has still not be released by IDOR as far as I know. Makes you wonder why this Administration hasn’t released a study that the legislature wanted done and the taxpayers paid for.
Comment by Cogito Friday, Nov 16, 07 @ 11:46 am
$500M is a lot of cash, but do keep in mind that if the TIFs were abolished tomorrow, that dollar figure would be split up by schools, city, county, MWRD, City Colleges, and the numerous other taxing districts. It would go a long way towards fixing the budget holes for CPS, Cook, and Chicago, but might not even fill those.
@Greg, ICE had planned to keep CBOT jobs here by moving its own headquarters here. Its CEO had even gone so far as to purchase a downtown condo. Also, the 400 to lose their jobs will probably be backend folks who didn’t earn mucho off the IPO.
@Phocion, Oregon voters pulled back property taxes with Measure 50, long after the Portland Development Commission had issued TIF-backed bonds for urban renewal. Since the bonds are backed by Portland’s faith and credit, now taxpayers citywide pay an “urban renewal special levy” to repay the old TIF bonds. Needless to say, this only makes TIF even less popular than before.
To their credit, PDC also extensively reports on its activities online. There is no excuse for Chicago not to do the same, since naturally the printed TIF reports have to go through a computer at some point in time — unless, of course, they were trying to hide something.
Comment by PCC Friday, Nov 16, 07 @ 12:09 pm
PCC-
You’re right, I shouldn’t have said “to Atlanta.” That was a mistake. What I meant was a strong CME for Chicago. I think the deal that eventually happened was best for the city, though certainly $40M wasn’t what nudged it along.
But as to the backend folks, there was plenty of ipo action among them. I know some who made plenty. My larger point was that you work in theis business without the expectation of union-like job security. We’d have to retain archaic financial practices to keep some of those jobs.
Comment by Greg Friday, Nov 16, 07 @ 12:32 pm
Can the TIF abuse problems be addressed at a ConCon? Instead of bidding on the next big-box store with taxpayer money, can we distribute sales tax funds per capita?
Comment by Millstadt News Guy Friday, Nov 16, 07 @ 1:46 pm
This is goes to show why for the most point its a bad idea for the government to get directly involved in economic development by financing companies. The money usual ends up going to political favorites that do not need the funds and could easily raise them on the securities market if the need be or it goes to companies that are just plain bad ideas.
Comment by RMW Stanford Friday, Nov 16, 07 @ 2:11 pm
Phocion raises the ultimate ogre point. What will have to happen in a type o taxx swap ius that the base valuation on the TIF for each and every TIF will have to be lowered so that the TIF Bonds do not go belly up. In addition, the 20 year bond/23 year TIF term will have to be extended so that the Bonds can be paid.
This will not be welcome news to the taxing bodies.
Comment by Truthful James Friday, Nov 16, 07 @ 2:22 pm
I’ll point out one giant unfunded need that the city could and should address today with TIF: capital improvements for CTA will almost certainly improve the tax base. Atlanta’s Beltline, NYC’s Far Westside #7, DC’s Metrorail to Dulles, and the Portland Streetcar are all being funded through TIF.
Comment by PCC Friday, Nov 16, 07 @ 7:03 pm