It was only a few weeks ago that Mayor Rahm delivered a budget address in which he praised himself for doing the responsible—although boring and unpopular—thing of raising taxes to free future Chicagoans of onerous obligations.
And then, wham, last month his administration announced he was rushing through a haphazardly thought out and deceptively promoted TIF extravaganza that would hammer taxpayers with a nasty one-two punch of higher property taxes and less money for schools and other essential services.
So much for that responsible budget thing.
I’m talking about the Lincoln Yards Tax Increment Financing district. Actually, it’s called the Cortland/Chicago River TIF, but it might as well be the Lincoln Yards TIF ’cause its boundaries pretty much correspond to the project that Sterling Bay, a development firm, wants to build along the east and west sides of the Chicago River between North and Fullerton.
Oh, if Rahm were only so accommodating to, say, the mental health needs of low-income people in high-crime areas.
Now, there are many reasons to be dubious about the Lincoln Yards proposal—a massive array of skyscrapers, condos, restaurants, a soccer stadium, offices, hotels, restaurants, and entertainment venues.
You might object to the congestion it will cause, its design, the lack of transparency in the connection between the developer and the city, or the roughshod way they’re treating the Hideout music club.
But for the moment let me talk money, as in how much this sucker’s going to cost you even as the mayor and his aides contend it’s an “investment,” not a “giveaway,” that “will more than pay for itself,” as Planning Commissioner David Reifman recently told Crains.
So just in case there’s anyone in Chicago naive enough to fall for Rahm’s line, let me take the moment to explain—once again—how this TIF thing works.
When the City Council approves a TIF district, it basically freezes for 23 years the amount of property taxes the schools, parks, library, city, county, etc. can collect from property owners in that district.
As property values in the TIF district rise, the new tax dollars that property owners must pay get diverted from the schools and parks, etc. into a bank account largely controlled by the mayor.
Which gives the mayor a lot of power. Thus explaining why Rahm loves TIFs so much.
In this case, Mayor Rahm is proposing to spend the money building new roads, bridges, and other infrastructure so that Sterling Bay can build Lincoln Yards.
Since Sterling Bay is not directly receiving the money you can’t call it a handout to a developer, the mayor’s arguing.
At the moment the land is mostly industrial or vacant. If Sterling Bay builds Lincoln Yards it will become some of the most valuable residential and commercial property in the city.
Property owners there would be paying tens of millions of dollars in property taxes. But the vast majority of this money would—as I said—be diverted from the schools to the TIF.
As the largest property owner in the TIF district, Sterling Bay would basically be allowed to take the money it would ordinarily have to pay to the city and schools and spend it on itself. Or its Lincoln Yards project.
Think of it as though you told the mayor—Hey, Rahm, I won’t be paying property taxes to the schools this year. Instead, I’ll use that money to build a new garage.
Who knows—fork over enough in campaign contributions and he might let you get away with it.
And all the time that Sterling Bay is paying property taxes to its own not-so-little TIF piggy bank, our schools, police, fire, parks, etc. will need more money to keep up with rising costs. So the powers that be will have to raise your property taxes, Chicago, to compensate for the money they’re not getting from Sterling Bay in its TIF.
And, by the way, it’s not as though the Lincoln Yards development won’t itself need city services. Like any other community, it will need police to patrol the streets and firefighters to put out fires and snow removers to remove the snow. Why, the parents who buy those condos may actually want to send their children to public schools. So they’ll need money for that.
But for 23 years, the property owners in Lincoln Yards won’t be contributing much in the way of property taxes for these basic city services, ’cause the bulk of their property tax dollars will be diverted to the Cortland TIF.
In short, the generous taxpayers of Chicago will spend hundreds of millions of dollars transforming the area so Sterling Bay can make even more money developing it.
Nothing against Sterling Bay, but if they want to build Lincoln Yards so much, they should pay for their own roads and bridges and such.
Just as you would have to pay for a new garage.
Now, if the cost if those bridges and roads make Lincoln Yards too expensive for Sterling Bay, or any developer, to build—oh, well. That would fall into the category of—sorry, but that’s not our problem.
My guess is that if left alone most of this area would slowly and systematically develop just fine on its own—as the rest of nearby Lincoln Park, Wicker Park, and Bucktown have done.
Without a TIF, all of the new tax dollars generated by new development in this area would flow into the public coffers, helping pay for schools and fire and police and so forth.
I know this stuff is complicated and confusing—that’s another reason why the city’s been able to exploit the TIF scam for all these years. People just get confused and throw up their hands and go back to cheering for the Bears.
Or whatever they do to dull the pain of existence.
A few weeks ago, I wrote about how Mayor Rahm was leaving a growing mountain of obligations—including billions in pension debt—for his successor.
I hope the mayoral candidates running to succeed Rahm will use their clout to block this deal. Otherwise that mountain of debt will grow even higher. v