* Tribune…
As politicians continue to bicker over state school funding with payments already behind, Gov. Bruce Rauner is accusing Mayor Rahm Emanuel of using the city’s tax increment finance districts as a “slush fund” that shortchanges Chicago Public Schools.
Emanuel fires back by saying the city has used TIF districts to pump more money into education than it could have in their absence. And he contends that Rauner’s assertions are meant to pit suburban and Downstate children against their city counterparts.
A Tribune examination shows that Emanuel is right when he says the city has used the controversial taxing districts to spend more on schools and that state law prevents it from tapping most of the money in those districts for CPS costs. […]
The city under Emanuel also has halted new projects in downtown TIF districts, allowing the city each year to declare more TIF money as surplus that then gets distributed to local taxing districts. More than $400 million in TIF surplus funds have gone into CPS coffers since 2011, city officials said, on top of tens of millions of dollars declared surplus under Daley.
And both Daley and Emanuel have spent money in TIF districts to build, expand and upgrade schools. City officials say the amount spent on those projects over the years tops $1.3 billion.
The Trib put together a really good story, so be sure to go read the whole thing.
* Meanwhile, the Illinois Municipal League’s president Karen Darch sent a letter to Gov. Rauner the other day…
Dear Governor Rauner:
On behalf of the Illinois Municipal League (IML), I write to respectfully express concern with your recent description of Tax Increment Financing (TIP) districts as “slush funds” during your interview with Chicago Tonight on Monday, August 14, 2017.
TIP districts are not only an essential tool, but frequently the only tool available for municipalities to revitalize blighted properties over time. Blighted properties underperform economically, depress nearby property values and ultimately reduce the amount of property tax revenue collected by local governments, including school districts. TIP was designed to benefit communities by rehabilitating these underperforming properties so they can make positive economic contributions to the surrounding property tax base and the community as a whole.
As Village President of Barrington, a non-home rule community, I can personally attest to the absolute need for and value of TIP as an effective community development tool. The entire revitalization of downtown Barrington would not have occurred without TIP assistance, as the older individual retaillcommercial parcels in our downtown could not attract redevelopment “but for” the assistance the TIP district could provide. The downtown improvements not only serve to lessen the devastating impact of the decline in property values following the mortgage crisis, but have added to the sales tax and employment base for my community as TIP districts have in many others throughout Illinois.
As President of the Illinois Municipal League, I participated in a conference call of the organization’s Executive Committee on Tuesday, August 15. The mayors on the call believed it important to convey to you our strong support for TIP. Macomb Mayor Michael Inman cited the ongoing rehabilitation of an old hotel into a modern senior living facility using TIP. North Chicago Mayor Leon Rockingham cited the redevelopment of a 40-acre site that would not have occurred without TIP assistance. Mayors throughout the state could offer similar examples.
IML strongly supports TIF as an effective and, for many municipalities, the only viable redevelopment tool available to improve local communities and expand employment opportunities.
* Greg Hinz has the react…
Rauner spokeswoman Laurel Patrick pretty much said the governor has made up his mind.
“While TIFs stimulate economic growth in some areas, they do so by depriving economic growth in other areas. They also put government in the position of choosing winners and losers,” she said in an email.
Beyond that, TIF districts are subject to abuse, she said, pointing to a recent Crain’s story about the diversion of TIF funds from the McCormick Place area to a project at Navy Pier, Patrick continued. “A more effective economic development tool is low regulation and low taxes.”
Of course, by that logic, Rauner would veto a bill now on his desk to renew the state’s Edge payroll tax-credit for companies that add or retain jobs in the state, since that’s “choosing winners and losers.” But Rauner’s office has indicated he intends to sign the bill.
*** UPDATE 1 *** Apparently, the governor doesn’t agree with his spokesperson because he signed this bill on August 18th…
Creates a tax increment allocation financing extension for an ordinance adopted on January 31, 1995 by the Village of Milledgeville.
*** UPDATE 2 *** By my count, the governor has signed 7 TIF creation/extension bills…
*** UPDATE 3 *** A group backed by Gov. Rauner to to develop the former YWCA block in downtown Springfield is asking for $2.8 million in TIF money.
- A guy - Tuesday, Aug 22, 17 @ 12:07 pm:
Everyone is right and everyone is wrong.
TIF is the only real viable economic development tool left for many, if not most municipalities in the State of Illinois. There are remarkable examples of them doing precisely what they were designed to do.
Having said that, the abuse is completely out of hand, and many of those municipalities are the abusers. They got greedy. They misused the only tool available to them. They did so with complicit cooperation from the GA.
Stricter enforcement of the guidelines would be helpful. If you take it away, you’ve taken away the only tool available for many communities in flux. And neighborhoods in large cities as well.
The complaining tax bodies only want to focus on the abuses. How about completely renewed communities and neighborhoods. Those are your jobs that were saved in those places.
- Jake From Elwood - Tuesday, Aug 22, 17 @ 12:07 pm:
I am generally opposed to TIFs.
Under the current system, pretty much any piece of land in the state can meet the eligibility criteria under the TIF Act–just ask the high-paid TIF consultants. I have yet to see a TIF consultant reject a project under the current TIF criteria, someone please correct me if I am wrong.
To me, TIF was meant to be a limited redevelopment tool for downtowns that have fallen into significant disrepair, but it has been bloated and expanded beyond what is reasonable. It is not designed to redevelop farms right off of the tollway.
The TIF eligibility criteria need to be narrowed.
Until then, municipalities and their friendly developers will continue to poach property tax dollars from school districts and other taxing bodies for their own use and enjoyment.
Municipalities get to finance their own projects with TIF increment funds and sometimes get sales taxes from new developments. But the school district and other taxing bodies lose.
There have been scores of abuses.
TIF reform is desperately needed.
- illini97 - Tuesday, Aug 22, 17 @ 12:08 pm:
‘Beyond that, TIF districts are subject to abuse, she said, pointing to a recent Crain’s story about the diversion of TIF funds from the McCormick Place area to a project at Navy Pier, Patrick continued. “A more effective economic development tool is low regulation and low taxes.”’
The problem is that Rauner is entirely inconsistent on his points. If he’s against TIF on principle, then why support EDGE? If he’s against the “slush funds” and “corruption,” then why trot out Intersect Illinois with no FOIA requirements?
- Perrid - Tuesday, Aug 22, 17 @ 12:09 pm:
I am missing something, or did Darch swap TIP and TIF as if they are interchangeable? Is TIP an actual acronym, or a typo? She used it a lot…
- Michelle Flaherty - Tuesday, Aug 22, 17 @ 12:13 pm:
Uggghhhhh …
I am so tired of my tax dollars bailing out Milledgeville
- Southside Markie - Tuesday, Aug 22, 17 @ 12:14 pm:
TIF (I don’t know what TIP is) helps level the playing field for development. It makes disadvantaged communities competitive by allowing them to provide incentives for the development of blighted areas. The fact that an affluent community like Barrington, Lake Forest, River Forest and Highland Park have TIF districts point out how a great program has been abused and desperately needs reform. I have a hard time imagining anything in Barrington that is blighted.
- Oswego Willy - Tuesday, Aug 22, 17 @ 12:14 pm:
===Apparently, the governor doesn’t agree with his spokesperson because he signed this bill on August 18th…===
In a nutshell…
“That’s all I’m saying. It’s a process question, it’s not a political question.” - Rick Pearson, Chicago Tribune.
That snippet… that snippet is the reason Rauner’s spokesperson and Rauner’s signature on another bill are at odds right here.
Rauner’s messaging is based on the politics, not the process or the policy, inconsistent as Rauner continues to be.
- Southside Markie - Tuesday, Aug 22, 17 @ 12:16 pm:
Sorry. In my rush, I messed up my grammar.
- Langhorne - Tuesday, Aug 22, 17 @ 12:19 pm:
BTIA–purity of thought–a more effective development tool is low regulation, and low taxes; TIFs are slush funds that hide wealth, so penalize schools and locals without warning or recourse; picking winners and losers
Rather than consistency of thought–TIFS are bad, so lets create a new one
Govt picks winners and losers nonstop. Pol sci 101–two basic questions of govt are who pays? and who benefits?
- blue dog dem - Tuesday, Aug 22, 17 @ 12:21 pm:
Again I welcome all to google East-West Gateway TIF Report..one govt lobby group IML in direct contrast with another.
Me. Get out of the TIF/ tax credit scam. Crony capitalism. Winners vs losers. UnAmerican. All of the above.
- Precinct Captain - Tuesday, Aug 22, 17 @ 12:29 pm:
Sounds like Rauner is the King of TIFs from this update.
- illini97 - Tuesday, Aug 22, 17 @ 12:30 pm:
OW is correct. This inconsistency demonstrates some bush league work by the BTIA. Ayn Rand is fun for ideologues but she’d make a terrible Governor or legislator.
“That’s all I’m saying. It’s a process question, it’s not a political question.” - Rick Pearson, Chicago Tribune.
- anon2 - Tuesday, Aug 22, 17 @ 12:36 pm:
=== I have a hard time imagining anything in Barrington that is blighted.===
“Blighted” is a remarkably flexible and relative term. By the standards of Barrington and Oak Brook, they have “blighted” areas that only a TIF can cure.
- blue dog dem - Tuesday, Aug 22, 17 @ 12:37 pm:
To the Updatex1. A real conservative does not endorse TIF or tax credits.
- blue dog dem - Tuesday, Aug 22, 17 @ 12:40 pm:
Just missed x2 and x3. Just how many TIF districts are there in this state. ?.
- Flynn's mom - Tuesday, Aug 22, 17 @ 12:43 pm:
TIF in Chicago=bad. TIF anywhere else=good.
This is the governors logic.
- Lamont - Tuesday, Aug 22, 17 @ 12:45 pm:
I am against TIFs because school districts, which rely predominantly on property taxes, lose income. This increases my property taxes to make up for the lost income. I am, in effect, subsidizing these TIF areas. Now, if the State did its constitutionally mandated job of paying for education, I might have a more open mind about TIFs. But there would have to be strict definitions of blight—I don’t want my tax money going to rich developers who want to build condos in an old YWCA.
- Seats - Tuesday, Aug 22, 17 @ 12:47 pm:
Not a TIF fan but you can’t spring such a change on it all at once. You need to gradually make changes to it so schools aren’t punished by decisions out of their control.
- anon2 - Tuesday, Aug 22, 17 @ 12:56 pm:
=== I am against TIFs because school districts, which rely predominantly on property taxes, lose income. This increases my property taxes to make up for the lost income. ===
School districts still receive their full levies, so they aren’t shortchanged. The real problem is that over the decades in the life of a TIF district, TIFs cause a shift in the burden of property taxes to owners outside of TIF districts.
School districts can be harmed, however, when TIFs subsidize new residential housing that sends students to local schools without the increased property taxes to pay for them.
- Dance Band on the Titanic - Tuesday, Aug 22, 17 @ 12:59 pm:
So Rauner was for TIFs until suddenly becoming anti-TIF about a month ago? Hmmm…
BTW - If you click the link to the original IML letter, it says TIF not TIP. Something must have happened when Rich posted the text here.
- PragmaticR - Tuesday, Aug 22, 17 @ 12:59 pm:
As with almost all government interventions, TIF districts are an imperfect solution to a difficult problem. A blighted area that remains unused would be a much worse outcome than redevelopment through a TIF district. Certainly, economic activity and property tax revenue would remain low in these blighted areas. If eligibility should be more limited, then change that part of the law. Why link the potential TIF abuse to education funding for the entire state?
- DuPage Bard - Tuesday, Aug 22, 17 @ 1:01 pm:
#BTIA
We believe what we write and the Governor does too. Until he doesn’t. But he won’t say he doesn’t he’ll just act in the contrary to what we write and he believes.
Then no one will really call us out anyway, so who cares.
- yinn - Tuesday, Aug 22, 17 @ 1:03 pm:
I totally agree with “a guy.” TIF in the right hands is an excellent economic development tool, but in the wrong ones can and do function as slush funds.
I give you the example of DeKalb’s having opened a TIF on account of cornfields being successfully classified as a terrible blight on the community.
Reform is definitely in order. Besides better definition and enforcement of the blight test, I’d like to change the loophole where a municipality doesn’t have to execute a budget amendment in a TIF fund as long as total projected expenditures in that fund stay the same. Last year, DeKalb gave $1.5 million to a car dealership as an economic development incentive, and the public wasn’t informed that the money was being transfered from street maintenance line items because the city council wasn’t required to approve a budget amendment.
I’d also like to see mechanisms for other affected taxing bodies to have more say in annual TIF budgets, and better accountability of expenditures toward mysterious “developmental services” funds.
- Joe Bidenopolous - Tuesday, Aug 22, 17 @ 1:07 pm:
Well, I mean, the “governor” signed all those before bringing on BTIA, right? So now he’s just seen the light.
- blue dog dem - Tuesday, Aug 22, 17 @ 1:10 pm:
Yinn. In any given town,should one car dealer get a TIF deal while another doesn’t?
- wordslinger - Tuesday, Aug 22, 17 @ 1:12 pm:
Rauner is against picking winners and losers?
That’s news to Exelon.
A $235M annual surcharge levied on ratepayers to “save jobs” at a rate of about $150K per year per job.
That BTIA messaging keeps paying off.
- PublicServant - Tuesday, Aug 22, 17 @ 1:13 pm:
===You need to gradually make changes===
Rauner is a radical ideologue. The word gradual is not in his vocabulary.
- Ducky LaMoore - Tuesday, Aug 22, 17 @ 1:31 pm:
===Yinn. In any given town,should one car dealer get a TIF deal while another doesn’t?===
At the request of a few business owners in my town, the council created a second TIF district. So, basically anyone that wants in can do a little politickin’ and get in, at least in my neck of the woods.
- Southside Markie - Tuesday, Aug 22, 17 @ 1:32 pm:
Agree with anon2 that the term “blighted” is flexible. Way too flexible, causing the problem. TIF should help truly blighted communities compete, not the affluent. For those who say that it diverts monies from school districts: TIF incentive deals must meet a “but for” standard, i.e., but for the provision of the incentive, the development would not occur. Consequently, the school district would not have received the increased tax revenue from the development in any event. Of course, this presumes the TIF was implemented for a particular development. Which doesn’t always happen and there lies the rub. And, again, the need for reform.
- A guy - Tuesday, Aug 22, 17 @ 1:38 pm:
==Yinn. In any given town,should one car dealer get a TIF deal while another doesn’t?===
That would depend on “where” the TIF candidate was willing to open one. Car Dealers are highly sought after revenue producers in towns. Every town wants them. If they would open in a less desirable, improvable site, they’re totally worth the TIF grant. If it’s a highly desirable site on the main strip among other thriving businesses; no to TIF. But, a lot of communities would look at other tax incentives to snag them because of the high cost of their merchandise generating a lot of sales tax.
- the Cardinal - Tuesday, Aug 22, 17 @ 1:42 pm:
TIFs allow locals to “incentivize’ developers into a project for some its the only type of development they do. Win for a blighted area that gets things rolling win for the developers they get much better rates. The loss is in the short term for other local taxing bodies.
- blue dog dem - Tuesday, Aug 22, 17 @ 1:49 pm:
A Guy. My question should have been, “in a given town, is it fair that any dealer should have an advantage via TIF over another, say per chance they are seperated by 1 block?
- Shemp - Tuesday, Aug 22, 17 @ 2:09 pm:
River’s Edge Tax Credits the Gov just signed was picking 5 winners. I can think of a lot of other places, mine included, that would like in on that perk.
- Annonin' - Tuesday, Aug 22, 17 @ 2:21 pm:
Couldsomeone ask Jake to see where his intermodals are located?
The fun element here is the mayor was on GovJunk transition team and Slip&Sue’s commission. Another GovJun lifer over the side.
- Downstate43 - Tuesday, Aug 22, 17 @ 2:27 pm:
=== anon2 @ 12:56 pm
School districts still receive their full levies, so they aren’t shortchanged. ===
Mostly wrong, and a gross misunderstanding of how property taxes work in IL. School districts always receive “their levy”, because it’s up to them to set it. School needs $10 million to operate = $10 million levy. New development in TIF district = not subject to taxing to meet the levy = new development not counting towards meeting the levy.
They receive the baseline amount, but do not capture any additional increase in property values/taxes within the TIF district until the sunset date. I’m pretty sure you and the guv are on the same page, though.
- PragmaticR - Tuesday, Aug 22, 17 @ 2:29 pm:
Whether TIF districts are beneficial or harmful does not change the fact that they currently exist throughout the state. If the Governor and the legislature want to eliminate TIF districts, then change the law. While the state waits for that to happen, a reasonable starting point is that school districts do not have access to this property tax revenue.
- blue dog dem - Tuesday, Aug 22, 17 @ 2:41 pm:
Here is how I see school districts losing..has anyone out there seen a vacant main street as a result of a shiny new TIF financed retail district. Hop on board the old Blue Dog bus if you haven’t, and I will show you one. Or a dozen.
- Just Curious - Tuesday, Aug 22, 17 @ 3:25 pm:
If a community, consultant and/or a developer is abusing the TIF statute, go after them, not the program. TIF is “But for” the designation the development would not occur, and it is a gap financing tool.
- Southside Markie - Tuesday, Aug 22, 17 @ 4:04 pm:
== They receive the baseline amount, but do not capture any additional increase in property values/taxes within the TIF district until the sunset date. ==
In truly blighted, truly disadvantaged areas no TIF = no development = nothing more for schools anyway = no loss to school districts. The schools lose when TIF is abused to develop so-called blighted properties in affluent communities. (Although, when you look at the disparities in spending between school districts in Illinois, it is hard to shed tears for many school districts in these affluent communities.) Troubled communities lose then too, because TIF becomes an advantage for the affluent instead of leveling the playing field for the troubled. Don’t throw the program out.
Fix it to make it applicable to only to disadvantaged municipalities.
- Jake From Elwood - Tuesday, Aug 22, 17 @ 4:26 pm:
I concur with Southside Markie. Let’s use TIF to help redevelop blighted properties in places like Harvey and not serve as a tool to enrich the Barons of Barrington. And by all means let’s improve the partial TIF rebates given to school districts.
- Chicago 20 - Tuesday, Aug 22, 17 @ 4:51 pm:
- “Crain’s story about the diversion of TIF funds from the McCormick Place area to a project at Navy Pier, Patrick continued. “A more effective economic development tool is low regulation and low taxes.”
The interim MPEA board adopted the Navy Pier framework plan that was initially pegged at $155 million. Bruce V. Rauner who was a member of the interim MPEA board voted for the Navy Pier framework plan and also rubber stamped the $180 million ULI plan for Navy Pier privatization and the C. H. Johnson,145 page Interim Board Report Findings which was ordered by the interim MPEA board and both reports were completed in under 20 days after they were ordered.
These actions by Rauner increased regulations and taxes, completely contrary to what the IPI is saying now. Since then the MPEA deficit has climbed to $1.581 billion and the MPEA debt is now over $4 billion with the repayment schedule pushed out to FY 2053.
14 trade shows have left McCormick Place since Rauner voted for the reforms outlined in the Interim Board Findings Report.
MPEA revenue from exhibition facilities rentals have dropped 49.51% since Rauner voted for the reforms.
It should also be noted that Jim Reilly previously worked for C.H. Johnson as the lead consultant on the failed St. Louis Renaissance Hotel debacle.
- Arthur Andersen - Tuesday, Aug 22, 17 @ 8:54 pm:
Hey Chi 20, what’s the Cliff’s Notes version of the St. Louis Hotel debacle if you know? Just curious. Thanks.
- Chicago 20 - Tuesday, Aug 22, 17 @ 11:35 pm:
Off the top of my head the Cliff’s notes version is St. Louis and Missouri believed a sales pitch and a Chicago consulting company that a hotel development would revitalize the city. The taxpayers were on the hook for the debt while a private company operated the facility. The project missed forecasts by a large margin and the taxpayers were stuck with the debt. C. H. Johnson were also the consultants on the Kansas City Power and Light District which also missed projections and the taxpayers are stuck with the debt.
https://kansascity.relaymedia.com/amp/news/politics-government/article9530081.html?utm_medium=referral&utm_campaign=amp&utm_source=www.kansascity.com-RelayMediaAMP
What’s really scary is it’s all hauntingly similar to the new 1,200 room Marriott Marquis hotel deal at McCormick Place. The MPEA forecasts are banking on having the very same occupancy rates and average daily rates as hotels in Chicago’s central business district at Cermak and Indiana.
Most troubling is the debt for the Marriott is $493 million instead of $7.1 million of Missouri senior revenue bond service.
http://bojack.org/images/stlouisreport.pdf
“C.H. JOHNSON CONSULTING , I N C . EXPERTS IN CONVENTION, SPORT AND REAL ESTATE CONSULTING
Jim Reilly has 27 years experience in management, marketing and development of publicly focused real-estate. He served as the CEO of the Metropolitan Pier and Exposition and head of the Chicago Convention and Tourism Bureau. Mr. Reilly
was responsible for the successful redevelopment of Navy Pier into the largest and most visited cultural, recreational, and tourism attraction in Illinois and the Midwest. Jim was also responsible for the seamless integration of McCormick Place
and Navy Pier, the addition of the Hyatt to the McCormick Place campus, and addressing its deficiencies as it was originally developed.”
Too bad Reilly’s self proclaimed expertise didn’t help himself with his very own Sandpiper Inn in Union Pier, Michigan where Reilly and Horizon Bank lost a fortune.
http://www.johnlocke.org/site-docs/CLI/EDRisks-Rewards_HeywoodSanders.pdf
The question is how did C. H. Johnson get the consulting contract for recommendations to the MPEA interim board and have a 145 page report finished in only 20 days and then the MPEA interim board adopted every single recommendation?
If you ask me I think the recommendations were written way before the MPEA meltdown occurred.
- anonymous - Wednesday, Aug 23, 17 @ 8:24 am:
Tax Increment Financing should be abolished. Let’s call it what it is: A TIF simply legalizes theft by one taxing body that wishes to have more revenue, from another existing, taxing body. No referendum required; no votes by the public; no recourse for the other taxing bodies.
- MacombMike - Wednesday, Aug 23, 17 @ 9:16 am:
Consider me shocked that a group of elected officials who stand to benefit from the TIF program have come out in defense of the TIF program.