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A controversial tax subsidy program will generate a record $1.2 billion in revenue. Here’s what the number means for Chicago.

Wednesday, July 31, 2019
Chicago Tribune
by Juan Perez Jr.

Cook County’s tax increment financing districts will bring in nearly $1.2 billion in revenue this year, according to a new report from Clerk Karen Yarbrough’s office. That’s a record, spurred by a big increase in collections from Chicago.

“An amazing number,” Yarbrough said Wednesday.

Chicago collected roughly $841 million in TIF money, an increase of more than 27 percent over last year and more than a third of the city’s total property tax collection.

The city’s TIF revenue growth has much to do with higher property value reassessments that have triggered bigger tax bills for residential and commercial property owners in Chicago’s central core and North Side.

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Of the $14.9 billion in property tax billed in this year, a record $1.2 billion is due to Tax Increment Financing.

For the full 2018 TIF Report: https://bit.ly/2SXDSr5

See Karen A. Yarbrough's other Tweets

More than 25% of Chicago properties sit inside a TIF district, according to Yarbrough’s office.

Tax increment financing allows governments to raise money for development projects, by setting aside the extra property tax dollars generated from a certain area’s new construction or rising property values to pay for things such as new parks, sewer pipes or vacant land. Cities have broad latitude to determine how the money gets spent, and TIF districts can stay in place for decades.

The idea’s basic intent is to spur construction and job growth in blighted areas. The money also can be used by Chicago’s City Hall, Chicago Public Schools and local governments.

One massive TIF district intended to help modernize North Side Chicago Transit Authority train rides is sending more than half of its revenue to CPS. Plus, Chicago’s surplus TIF revenue could offer Mayor Lori Lightfoot a pot of money to tap as her administration grapples with a significant 2020 revenue shortfall and delays the release of the city budget forecast.

The two largest TIF districts in city history will go online next year to subsidize riverside mega-developments. That means even more money will soon be in play.

“So, those of you who live somewhere where there’s a TIF, or if you live in a TIF, you should pay attention to your village fathers and mothers on how the money’s being used,” Yarbrough said Wednesday.

Here are three takeaways from the county clerk’s report.

1. Transit project, downtown and Pilsen led the way in revenue collected last year

There were 138 TIF districts in Chicago during the 2018 tax year, which collected a total of roughly $841 million.

According to Yarbrough’s office, the “highest performing” TIF districts in Chicago this year are mostly in or around downtown.

The LaSalle Central TIF district that encompasses the Loop’s western edge, created in 2006, captured just shy of $101 million in 2018. The Kinzie-Industrial Cooridor TIF for part of the West Loop, Humboldt Park, and East Garfield Park communities took in $49 million in revenue. Five other downtown-adjacent districts each pulled in roughly $30 million.

A Pilsen TIF district that expires in 2022 generated another $20 million.

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The city’s TIF collections increased even though there are five fewer TIFs in Chicago this year. The two largest-ever TIFs — for the Lincoln Yards and “The 78” developments — are set to go on line next year after the City Council approved them in April.

2. Chicago Public Schools is a big beneficiary of TIF district meant for Red, Purple Line project

The TIF area for a multibillion CTA modernization project covers an enormous amount of ground. Measuring at a mile wide and stretching from North Avenue to Devon Avenue along Red and Purple Line CTA tracks, Chicago’s biggest special taxing district generated just shy of $116 million in revenue this year.

That’s nearly triple the amount of money the district captured last year, according to Yarbrough’s office, and the most generated in Chicago from a single district.

Former Mayor Rahm Emanuel and the City Council rushed to approve the new district in 2016, and planned to use some of the anticipated revenue to pay off debt that would finance new tracks, signals and a controversial flyover that will separate the Red and Purple line tracks from the Brown Line tracks north of Belmont Avenue.

This year, about $45 million of the TIF district’s revenue will go to the CTA project. Because of an arrangement unique to transit TIFs, $60 million will go to CPS, $6 million will go to the city and $1.6 million to Cook County. Most of what’s left over will be allocated to the county forest preserve and City Colleges of Chicago.

3. Lightfoot could use TIF money to ease the city’s budget problem and help schools

TIF districts are only supposed to be set up in areas where development would not otherwise occur, though former Mayor Richard M. Daley created some in areas, such as downtown, where critics said they were not needed.

Cities are allowed to declare TIF surpluses, and Emanuel established a policy that gave money not committed to a specific project or program back to city and county taxing bodies, particularly CPS. Emanuel also shut down some tax districts and put a halt to approving new projects in other downtown districts, which resulted in higher surpluses.

The tactic came in handy to help pay for contracts with the Chicago Teachers Union, which has pressured the city to send extra TIF funds to schools.

This year’s new TIF revenue could set the stage for another TIF surplus, but Lightfoot isn’t yet declaring her plans.

“The city is currently evaluating the annual TIF report released by the county clerk earlier today," a Lightfoot spokeswoman said Wednesday.

"As has been done in years past, we are looking at the full extent of our obligations, and evaluating how much is available and how these funds could be applied to balance several key priorities for the city, which include addressing significant capital needs, reconciling an upcoming deficit in 2020, and ensuring we are maximizing the use of funds to support the continued growth of our schools and neighborhoods.”

Chicago Tribune’s Hal Dardick contributed.

jjperez@chicagotribune.com



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