Let’s start with the good news: several hundred north-siders packed a sweltering hot field house in Uptown last week to jeer and sneer at the city’s latest proposal to funnel $50 million in property tax dollars to a developer, in this case one who wants to build a grocery store, a health club, and a bunch of condos.
Ultimately, the residents of the 46th Ward voted overwhelmingly against the project. But I’ll get back to that later.
The $50 million would come out of—yes, you guessed it—a tax increment financing district. In this case, the Montrose/Clarendon TIF, which former mayor Richard Daley and former alderman Helen Shiller left behind as sort of a horror-show monster to haunt taxpayers for the next 24 years. Both of them retired in May. Thanks for the memories, guys.
The TIF district is a 31-acre slab of land that runs along Clarendon for about four blocks between Wilson and Montrose, encompassing two vacant and boarded-up buildings owned by the Maryville Sisters, an order of the Catholic Church. For years, it was a hospital and then an emergency shelter, which closed in 2009.
Last year the development firm Sedgwick Properties optioned to buy the land for about $18 million, provided the city create a TIF, which would subsidize the project.
Sedgwick proposed to build roughly 900 condos and hotel/rental units in four buildings, including two towers (one 40 stories, the other 30). There would also be about 120,000 square feet of retail. Predictably, nearby residents rose up in rage over the potential traffic and density nightmares the project might cause.
Shiller withheld support for Sedgwick’s proposal, but that came after she signed off on creation of the TIF district on the grounds that at least $6 million would be used to repair the dilapidated Clarendon Park field house.
So the city’s plan effectively became giving a developer $44 million in property taxes in order to spend $6 million fixing up a public park.
But wait—there’s more. As you must know by now, a TIF diverts property taxes from the schools, parks, county, and other taxing districts and into bank accounts controlled by the mayor. More than $30 million of the roughly $500 million TIFs collect each year would otherwise go to the Park District.
So Mayor Daley, Alderman Shiller, and the City Council justified creating a new TIF district on the grounds that the neighborhood park needed money to make basic repairs. Of course, part of the reason the Park District had no money was because it’s losing millions of tax dollars every year to the TIFs. So they essentially created a new TIF to replace money that’s been diverted to existing TIFs. Get it?
Wait, wait—we’re still not done. The new TIF district adjoins Wilson Yard, one of those existing TIF districts.
Once the city approves a development deal for the old hospital site, it plans to move $6 million from the Wilson Yard TIF to the Montrose/Clarendon TIF to pay for the work at the Clarendon Park field house.
In subsequent years, the thinking goes, the Montrose TIF will then repay that $6 million to the Wilson Yard TIF. In short, one TIF will borrow millions from another to fix the field house that the Park District can’t afford to fix because it’s losing so much money to the TIFs.
I know this must all make sense in some distant corner of the universe.
For the record, I can’t blame this craziness on Alderman James Cappleman, who inherited it in April, when he was elected to succeed Shiller. And, to his credit, Cappleman called the June 7 forum to have the developers present their plans to neighborhood folks.
Afterward, he held a vote. According to Cappleman, of the 547 people who weighed in, 488 voted no. Another 32 voted yes, so long as aspects of the project—such as its height and density—were altered.
That means more than 90 percent voted against the project.
“I’m going to support the will of the community—I’m going to say this particular project cannot go forward,” Cappleman told me. “It is important that we fix the field house.”
Amen! So why not simply take $6 million from Wilson Yard right now to fix the field house and forget all about giving money to Sedgwick or any other developer?
“You make a very good point,” Cappleman said. “I’ve asked about the money in the Wilson Yard TIF and what is available. I’m waiting to hear from the city.”
As I said, Sedgwick’s project calls for a new grocery store and fitness center. Yet there’s already one fitness center and three grocery stores—including two that were built with TIF assistance—within walking distance.
Sedgwick’s spokesman, Jay Feeley, did not return calls for comment. But Cappleman said residents and local business leaders will meet with the developers to try and come up with a project all sides can support.
So it looks as though the Montrose/Clarendon TIF is still very much alive, unless Mayor Rahm Emanuel makes good on his vow to reform the TIF program and ends this lunacy before more money is wasted.
Speaking of TIF reform . . .
The legislative effort to give schools more control over how much money they have to divert to TIFs recently ran into a brick wall.
Originally devised by a bunch of housing activists and suburban public school officials, the bill would have allowed school districts to opt out of having to pay into TIF districts.
In the case of the Montrose/Clarendon TIF, it would have meant the Chicago Public Schools could have saved $30 million over the next 24 years instead of seeing it turned over to developers.
Alas, the opt-out provision never made it to the final bill, SB 540, which the senate passed on April 15. That provision was killed thanks to an aggressive effort by pro-TIF lobbying forces such as the Illinois Municipal League.
On May 31 the house passed a heavily amended version of the senate bill. But this amended bill died in the senate in part because of a house addition that had nothing to do with TIF reform: an extension of the Economic Development Area for Hoffman Estates, which is essentially a big tax break for the Sears corporate headquarters.
An EDA is like a TIF except the area doesn’t have to be blighted. Though, as I’ve discovered through the years, there are so many loopholes in the TIF law that TIF districts don’t really have to be blighted either—otherwise Chicago’s downtown wouldn’t have any.
Damn, this stuff is complicated.
Anyway, northwestern suburban school officials didn’t want the EDA extended because they’re tired of watching millions of their property tax dollars get diverted to Sears. So the TIF reform bill died in senate committee.
Why did the house muck up the process by adding the Sears subsidy amendment?
There are four possible answers: (a) it was an innocent oversight; (b) it was an attempt to sneak through the Sears subsidy by piggybacking it to a popular bill; (c) it was a devious attempt to sabotage TIF reform, as wimpy as it was; or (d) all of the above.
“I’d say d minus a,” said one Springfield lobbyist I talked to.
“I think it’s probably a little of all of the above, except for an innocent mistake. There’s nothing innocent about Illinois politics.”