Monday, May 22, 2017

TIF money

Chicago's TIF take soars nearly $90 million in just one year

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Chicago's take from tax-increment financing districts has unexpectedly gone way up, an action likely to set off a free-for-all about to do with the windfall.
According to a new report today by Cook County Clerk David Orr, city TIF receipts leapt 23.9 percent in the most recent property-tax year, 2015. That will give City Hall an extra $89 million to
spend, with total receipts hitting $460.6 million, the highest since the great recession.
"This is an enormous amount of money," said Orr, whose office administers TIF collections countywide, in a statement. He called "for a real debate during the budget approval process in the City Council this fall regarding the allocation of these funds."
Actually, the debate won't wait that long, not with homeowners having just been hit with a huge property-tax hike and Chicago Public Schools still short at least $200 million despite a new cash influx from Springfield.
Added Orr, "The city has declared a $116 million TIF surplus so far this year," distributing the proceeds to local governments in a legally set proportion, with most going to schools. "A comprehensive audit might show that even more money is available to be returned as surplus."
Even before today's report, the Chicago Teachers Union and some civic groups had been urging just that rather than, for instance, asking union members to pay more than the 2 percent of salary they now put into their pension.
Emanuel aides today said he wants to use proceeds from the sale of the Chicago Skyway to pay for a pending rebate of property taxes for some homeowners that would cost the city an estimated $21 million a year. But some aldermen want to expand that, and Emanuel aides declined immediate comment on whether the new TIF proceeds could be used instead, saying they just got and are reviewing the data.
Orr's report indicates the city, and particularly the central area where many large TIF districts are clustered, really gained from recent growth in property values, as reflected in last year's triennial reassessment of city property.
Roughly $12 million of the $89 million came just from rising values in the LaSalle Central TIF district. More than $5 million each came from the Chicago/Kinzie, Near North and River South TIFs.
Generally, Chicago's TIF districts citywide—there are now 148, down from a peak of 160—showed strong growth in receipts, known as increment, compared to 2014.
TIF revenues in suburban Cook County dipped 5 percent to $257 million.
City TIF revenues grew even though some districts have begun to reach the end of their legal 23-year legal life spans. Orr noted one downtown district, Roosevelt/Canal, has gone out of existence five years ahead of schedule, but suggested that Emanuel has not yet delivered on his promise to shut some other downtown TIFs early.
Total city TIF receipts peaked at about $550 million in 2006, and until this year had been steadily declining.
When a TIF district is formed, any increase in property taxes goes not to regular taxing bodies but for economic incentives and/or capital projects designed to make property in the district develop more and faster than it would have.
The program has been intensely controversial, with Emanuel and predecessor Richard M. Daley saying it is one of the few tools available to speed growth and to help pay for big projects such as bridges and train stations. Critics argue that it at least temporarily deprives schools of needed funds and is subject to abuse.
Update — The city just clarified something a bit. They won't be tapping Skyway sale reserves but transfer-tax revenues from the recent sale of the Skyway lease to pay for the property tax rebate. That is, however, a nonrecurring, one-year source.
Update, July 20 — Emanuel's office now has a little more to say, and the gist is that schools will get some, though not all, of that $90 million.
“TIF surplus is a one-time revenue source, and the administration will continue to provide TIF surplus revenue to CPS and other taxing districts, but we also will not stop working toward sustainable funding solutions for CPS, with all stakeholders doing their part.”
In other words, the teachers' union is going to have to chip in first.
A spokeswoman also says that, of the $90 million, $29 million are part of downtown TIFs where spending has already been frozen and some revenues are being declared surplus; $23 million already is committed to school bond debt service, and that $37 million is spread among 98 neighborhood TIFs in which the local alderman likely would have to go along with diverting money from local projects to schools. And Emanuel has declared his intent to declare a TIF surplus every year, the spokeswoman adds, though the figure is not set.

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