On May 19, Chicago Mayor Rahm Emanuel announced the formation of a task force charged with tax increment financing (TIF) reform. Echoing statements made during his campaign, Emanuel pledged to return TIF policy “to its roots.”
“TIFs are an affirmative instrument in neighborhood economic growth and job creation,” Emanuel told reporters at The Green Exchange, a sustainable business incubator. “It’s about economic growth, job creation and neighborhood redevelopment.”
The 10-person task force, led by former Chicago Transportation Authority (CTA) chair Carole Brown, will have three months to evaluate TIF programs. Its recommendations will be incorporated into the 2012 budget, according to the Mayor’s office. The city has already made TIF data accessible online “calling on all Chicagoans to engage in the process,” Emanuel said.
When the city establishes a TIF district, it freezes property tax rates for up to 23 years. The taxes on all new property value added during the lifetime of the district go into a fund intended for reinvestment in that area. But Emanuel noted the 27-year-old program “has been maligned” in recent years. Critics say it was essentially a special fund for Mayor Daley not subject to regulations applied to money in the city’s general fund.
Paul Sajovec, chief of staff for 32nd Ward alderman Scott Waguespack, said “a glaring lack of accountability” has historically characterized the administration of TIF funds.
“I think it would be a definite improvement to tighten up the relationship between the goals that are established when a TIF district is created and how the money actually gets spent,” Sajovec said.
Which districts get established is also a cause for concern, Sajovec said. Infrastructure improvement projects are “fighting a huge uphill battle” if not in a TIF district, he said, a policy which “doesn’t make any sense” from an aldermanic point of view.
“We’re very much encouraged by the fact that they’re going to take a look at the overall program,” Sajovec said.
State Sen. Heather Steans (D-7th) introduced a bill earlier this year calling for audits of all TIF districts in Chicago. State Rep. Maria Berrios sponsored a similar bill in the House.
Despite annual reporting requirements set forth in earlier reform policies, Metropolitan Planning Council Vice President Peter Skosey said the city could benefit from greater transparency in TIF programs.
“TIFs are a good tool for that fundamental purpose of removing slum and blight and laying the groundwork for private development to come in,” Skosey said. “I have high hopes for the mayor. It’s pretty remarkable that less than one week on the job we already see this kind of improvement.”
There are currently 165 active TIF districts in Chicago, covering nearly a third of the city. Balance sheets made available online by the city showed a total TIF fund balance of more than $1.46 billion for 2009, the most recent year tallied.