In May 2001 Chicago proudly unveiled the Englewood Tax Increment Financing District, local aldermen proclaiming that it would transform one of Chicago’s poorest communities.
“We have residents who are still here from back when there were restaurants and large homes and where the milkman delivered the milk at your back door,” said the 17th Ward’s Latasha Thomas. “This TIF will bring back Englewood to the way they knew it.”
“Today the spotlight is on Englewood and it’s been a long time coming,” said the 20th Ward’s Arenda Troutman. “The future of Englewood could well determine what happens throughout the south side, throughout Chicago, and ultimately set the trend for the resurgence of splendor in the inner cities of America.”
And 16th Ward alderman Shirley Coleman quoted from one of the great songs of the 70s. “This is a tool that we will use to put us in the driver’s seat to progress,” she said. “And so in the words of Marvin Gaye: ‘Let’s get it on.'”
Nine years later, Coleman and Troutman are both gone—Coleman lost her seat to JoAnn Thompson in 2007 and Troutman got busted for taking bribes from developers in 2008. And Englewood remains untransformed. The TIF has generated virtually no new commercial development at all.
Now, ironically, it’s about to lose roughly 15 percent of its TIF reserves, as Mayor Daley quietly withdraws $3 million from the Englewood TIF account to help balance the citywide $650 million deficit. Once again, Mayor Daley’s favorite economic development program hasn’t helped the kind of community it was supposed to help.
As most of you know by now, TIFs were originally intended to bring in development and bolster the tax base of the poorest of Chicago’s poor communities, places where if there were no TIF subsidy there’d be no development at all.
At the urging of the mayor, the City Council creates a district where the amount of property tax revenues flowing to schools, county, parks, and other taxing bodies is frozen for up to 24 years. Over time those taxes tend to rise—either because taxable development takes place, or simply because property values tend to increase regardless. And these additional—or “incremental”—revenues go into the TIF account.
It’s hard to make a plausible case that neighborhoods such as the Loop, the West Loop, the South Loop, Lincoln Park, and Wicker Park couldn’t attract development without TIF subsidies. Yet the loose eligibility requirements—in particular the part authorizing a TIF in order to “conserve” a neighborhood supposedly threatened with blight—have let Mayor Daley create at least one TIF in each of them. And though not one is remotely threatened by blight—if it ever was—the TIFs persist. The mayor and a complicit City Council have turned the TIF program into a way to keep tax dollars generated in wealthy communities from leaving those wealthy communities, at the expense of needier parts of the city.
There can be no denying that Englewood, in economic decline since the 1960s, needed help. In 2001 it was a high-crime, high-poverty community with roughly 7,500 vacant lots. The TIF district, whose zigzagging boundaries range from 55th on the north to 67th on the south and from Halsted on the east to Loomis on the west, was supposed to reverse this decline by subsidizing private development and rebuilding old and decaying infrastructure.
At that public meeting in 2001 of the Community Development Commission, the mayor-appointed body that oversees the TIF program, city planner Cindy Thomas laid out the Englewood TIF’s goals. The biggest one was “the development of in-fill housing on nearly one third of the 7,500 vacant parcels. An increase in residential properties will serve to attract the kind of business and retail that the community needs.”
The TIF would also be used to finance “public improvements such as infrastructure and repairs to water and sewer lines that are over 100 years old,” Thomas said.
Daley administration officials budgeted up to $75 million in TIF funds that would be spent on various projects over the TIF’s 24-year lifetime. “The TIF budget is predicated on the notion that there is private activity,” Stephen Friedman, a TIF consultant to the city, said at the hearing. “Otherwise, there will not be any increment generated to support that project.”
As of 2009, about $21.9 million had been deposited in the TIF, and in 2010 the city expects to collect about $4.5 million. By contrast, the LaSalle Central TIF, encompassing LaSalle Street from Randolph to Van Buren and reaching as far west as Wacker, has collected about $76 million since it was created in 2006 and this year alone expects to reap $24.7 million. The increment in Englewood is low because the TIF there has sparked no big-ticket projects, including the much hoped for in-fill housing.
The city has yet to create a significant development deal using the Englewood TIF. Developers haven’t been willing to invest there because the risks are high and the potential returns low. About $5 million has been spent to rehab local grammar schools and another $1 million or so to install new streetlights at key intersections. These are worthwhile projects, but they’re not the sort of private development boost—either housing or commercial—the TIF’s initial supporters had in mind because they don’t directly raise the tax base.
The TIF’s only significant economic-development proposal flopped. It involved a consortium of Korean merchants who’d been displaced from a mall at 63rd and Halsted that was demolished to make way for the new Kennedy-King College campus—a project unrelated to the Englewood TIF.
In May 2002, the merchants struck a deal with the city: they’d use $5.3 million in TIF money to build another mall, along Halsted between 59th and 61st streets, on 66 lots the city would sell them at a heavily discounted price. They planned to construct 72 storefronts and 320 parking spaces, and they talked about bringing in a bookstore, a doughnut shop, and sit-down restaurants.
That plan officially died this past September, when the city withdrew its offer of TIF funding. “The city never closed on the sale, and the [deal] was never executed by either party,” Department of Community Development spokeswoman Susan Massel e-mailed me. “The agreement for the sale and redevelopment of the land required [the developers] to provide [the city] with evidence of funds to finance the construction prior to closing of the sale of the land. Because the terms of the [deal] had not been solidified, the city was not obligated to convey the 66 parcels it had acquired to the developers without knowing its financial structure.”
The two-block stretch of Halsted remains vacant.
In October, Mayor Daley announced that he would withdraw $180 million from 25 of the city’s 160 or so TIF accounts to help reduce the deficit. I asked Pete Scales, spokesman for the city’s budget department, to explain the criteria for determining which TIFs to take from. He never got back to me. I also called aldermen JoAnn Thompson and Latasha Thomas, whose 16th and 17th wards contain the TIF—they didn’t get back to me either. (Redistricting has removed the 20th Ward almost entirely from the TIF.)
It looks as though the mayor has tried to spread the pain around geographically. For instance, the 35th and Halsted TIF, in Bridgeport, lost $1 million; the Read-Dunning TIF, on the northwest side, gave up $2 million; the 63rd and Pulaski TIF, on the southwest side, relinquished $1 million; and so on.
The big money—$95 million—came from four downtown TIF districts, including the Near South, which gave up $40 million.
But then these TIFs had most of the money to begin with. The Near South TIF has collected about $343 million since it was created in 1990 and it had roughly $55 million in reserves—that is, money not yet earmarked for any projects. Near South is arguably Daley’s biggest TIF success story. Created to help finance the Central Station project—the townhouse and high-rise community just south of Roosevelt and Michigan (coincidentally, where the mayor lives)—it helped spark a South Loop real estate boom. Such a boom, in fact, that it’s hard to justify the city’s not closing down the Near South TIF entirely.
In a fairer world, Mayor Daley would have taken more from his neighborhood TIF and spared Englewood its measly $3 million. On the other hand, you could argue that the mayor might as well take all of Englewood’s TIF money, since it doesn’t seem to be doing Englewood any good.
But if we get rid of TIFs that don’t accomplish anything in poor neighborhoods, let’s also get rid of TIFs in wealthier communities, where it’s not at all clear why developers need the assistance TIFs give them. In fact, with Daley on his way out, maybe it’s time to blow up the whole program and try something else.
Ben Joravsky discusses his reporting weekly with Dave Glowacz at mrradio.org/theworks.