Good news, Chicagoans! Our coffers are overflowing, as tens of millions of property tax dollars pour in to revitalize the schools, the parks, the city, and the county. There’s money for new books and new teachers, new police and fire equipment, expanded recreational services for poor kids who can’t pay rising Park District fees—maybe even a rebate for overtaxed property owners. And it’s all because around this time last year, the Central Loop tax increment financing district hit its 23-year anniversary. As everyone knows, TIF districts expire at the end of 23 years. Right?
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To understand why, you’ll have to sit through a little rudimentary background on tax increment financing. When the City Council, at Mayor Daley’s urging, creates a TIF district, it freezes the amount of property taxes the schools, parks, county, and other taxing bodies get in that district. Additional revenue created by higher assessments or new development flows into the TIF account, essentially a slush fund controlled by the mayor. To compensate for that lost revenue, the schools, parks, county, etc are forced to raise their tax rates. As a result, TIFs raise everyone’s property taxes. True, the city is always free to terminate a TIF before the end of its official 23-year tenure. Fat chance of that.
Take the Central Loop TIF. Created by the council under Mayor Harold Washington on June 20, 1984, it was originally intended to pay for the redevelopment of Block 37, at State and Randolph. In 1996 the council deferred to Mayor Daley’s wishes and OK’d an expansion of the district, which now covers almost all the property bordered by Michigan, Dearborn, Congress, and the Chicago River. When the TIF was created, the charter was quite clear about its expiration date: June 20, 2007. The Central Loop annual report for 2005 affirmed that the “project area may be terminated no later than June 20, 2007.” But last year’s annual report on the TIF read: “The project area may be terminated no later than December 31, 2008.”
In fact, pretty much everything about the TIF program is shrouded in duplicity. Officials tell you TIFs don’t raise taxes when of course they do—to the tune of $500 million just in 2006. (The Central Loop TIF alone collected about $110 million last year, about $55 million of which would otherwise have gone to the schools.) They say the TIF program is open and on the books, and yet it’s not in any budget or even on your tax bill, which therefore misleads you about how your tax dollars are spent. By law TIFs are supposed to be used to generate development in blighted areas, yet there are TIFs in some of the city’s wealthiest communities.
