TIF Follies

Did you know that the TIF program (Tax Increment Finance Districts) collected over $500 million in property taxes in 2006. This is a huge and secretive fund that is controlled by our Mayor and our Aldermen. This program directly impacts your property taxes – it RAISES them. Check out the background materials we’ve assembled to understand how.

Here we will chronicle the unbelievable subsidies YOU are paying for through this program.

Our February 12 meeting on TIFs made news! Read the story in The Chicago Journal.

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From the Chicago Tribune:

Plan gives CareerBuilder subsidy for Chicago HQ

By Tribune staff – February 20, 2008

http://www.chicagotribune.com/business/chi-wed_career_0220feb20,0,3742501.story

Internet firm CareerBuilder LLC would receive $2.9 million in city tax subsidies to expand its corporate headquarters in downtown Chicago under a plan approved by a city panel Tuesday.

The proposal endorsed by the Chicago Development Commission calls for using the city’s tax-increment financing program to help CareerBuilder rehab and reconfigure 150,000 square feet of office space at 200 N. LaSalle St. The project’s total cost is $11.6 million. The plan still must be approved by the Chicago City Council.

The company plans to consolidate at least 800 headquarters jobs there, while retaining 615 jobs at three other Chicago offices and adding 185 jobs here over the next two years, the city said.

According to a staff memo to the commission, CareerBuilder also is seeking about $13 million in state tax subsidies over a 10-year period to offset the higher cost of staying in Chicago, rather than distributing its headquarters jobs to offices in other cities, such as Norcross, Ga., and Phoenix.

CareerBuilder employs 2,400 in 25 cities and seven countries. It’s owned by Tribune Co., which publishes this newspaper; Gannett Co.; McClatchy Co.; and Microsoft Corp.

“We’re very excited about the opportunity to make Chicago our worldwide headquarters. We’re very pleased with the support that we’ve received from the city so far and happy we can continue to provide jobs here in the Chicago area,” CareerBuilder’s general counsel, Alex Green, said Tuesday.

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How poor is CareerBuilder that it requires Chicago’s stressed out tax payers to fork over this gift? According to Yahoo Finance, not very. “Every month, CareerBuilder.com generates more than 13 million job searches in accounting/finance, 12 million in healthcare and sales, 6 million in IT, 5 million in retail, 4 million in engineering, 3 million in hospitality and 2 million in government.In 2007, CareerBuilder.com generated $768 million in network revenue in North America, beating its largest competitor by more than $60 million. The amount of network revenue driven by the CareerBuilder.com sales force increased by 40 percent year over year.”
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From Crain’s Chicago Business:

Panel OKs TIF money for auto mall near North-Clybourn

By Eddie Baeb – Jan. 09, 2008 – Crain’s Chicago Business
http://www.chicagobusiness.com/cgi-bin/news.pl?id=27681

(Crain’s) — A proposed Grossinger auto mall near the North-Clybourn intersection was approved Tuesday for $8.5 million in tax-increment financing by the city’s Community Development Commission.

The project would redevelop the former Home Depot Expo Design Center at 1500 N. Dayton St. into a four-level auto mall run by Grossinger Auto Group with three to five car brands, including Toyota, Scion and Cadillac.

The development is expected to cost about $39 million, which includes gutting the interior of the 300,000-square-foot building and punching holes in the exterior for new windows. Grossinger is moving its dealership at 1233 N. Wells St. to the new location, and is to ulimately increase employment to 125 people from 67 currently, according to documents filed with the city.

Gary Grossinger didn’t return calls seeking comment.

The TIF money would come from the new “Weed/Fremont Tax Increment Financing Redevelopment Project Area,” which is being created specifically for this project and includes only this building.

The city Planning Department supports the TIF agreement. A spokesman for the Planning Department says the city has created such one-building TIF districts in other instances when the property is antiquated and difficult to redevelop.

“The building has been a white elephant the last three years,” he says. “It’s a hulking, concrete structure.”

The former Expo, owned by Crate & Barrel founder Gordon Segal, was built in the 1960s as a jukebox factory. The building later became a Homemakers furniture store before Expo opened there in 2002. The building has stood vacant since Expo closed in 2005.

Mr. Segal says he has signed off on the sublease between Grossinger and Home Depot, which still has another 13 years left on its lease. Mr. Segal says the new auto mall could open as soon as late this year.

The planning department spokesman says the new dealership, which could add two additional brands that aren’t yet determined, is projected to generate $1.6 million in annual sales tax revenue for the city.

Grossinger filed a zoning application last fall for the Dayton Street site, after dropping plans to expand its dealership at 1233 N. Wells into an auto mall amid complaints about potential traffic congestion from residents in the Old Town neighborhood.

The TIF agreement needs City Council approval.
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So how did this extremely successful and prosperous business get a promise of almost $9 million of our taxes?

From Ben Joravsky’s January 17 Chicago Reader column…

“The CDC also recommended giving $8.5 million to Grossinger Auto Group to help build a car dealership in the vacant Expo Design Center near the congested intersection of North, Halsted, and Clybourn. Lobbyist Terry Teele, a former deputy chief of staff for Mayor Daley, was so persuasive on Grossinger’s behalf that the CDC recommended making the site itself a TIF district, the Weed/Fremont TIF, with funds to be devoted exclusively to the project. No one from the city’s environmental department felt compelled to explain why the city would want to subsidize a multimillion-dollar auto dealership when it can’t find funds to alleviate the CTA meltdown. And no one from the planning department bothered to explain why one of the north side’s hottest real estate markets, where privately financed development fills almost every lot, merits a subsidy intended to eradicate blight.”

The comments after the article go on to reveal another in a series of seemingly endless conflicts-of-interest…

“Grossinger TIF is in Vi Daley’s 43rd ward … ”

Teele, Terry
1306 West Ardmore,Chicago, IL 60660
Occupation: Consultant,Employer: Self

$1,500.00 2/21/2007 – to: Friends of Vi Daley – http://www.elections.state.il.us/CampaignDisclosure

Further, that this same Teele was a lobbyist for Terry Rezco.

From 2003-2006 Teele registered as a lobbyist working for Tony Rezko’s lobbying firm.

http://www.ci.chi.il.us/ethics/Lobbylist/LobbyListFinal.html

Teele bio on Rezmar’s (cached) website – http://cache.zoominfo.com/CachedPage/?archive_id=0&page_id=526861515&pag

His bio: “TERRY TEELE, VICE PRESIDENT

Terry Teele serves as special advisor to Rezmar Corporation with an emphasis on governmental policies and practices. He has the knowledge and expertise to offer advice and facilitate communications with or between governmental agencies as well as advise, expedite and resolve infra-structure issues. Drawing on his background and talents, Terry will continue to play a significant role in the development of Rezmar’s exciting 62-acre Riverside Park development. With more than 15 years experience in city and state government, Teele recently served as First Deputy Chief of Staff for Mayor Richard M. Daley, focusing on urban planning development and neighborhood revitalization. Teele holds a degree in public administration from Eastern Illinois University.”
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From The Chicago Journal:

Wednesday, January 16, 2008

Neighborhood funds for neighborhood projects

http://www.chicagojournal.com/main.asp?SectionID=4&subsectionID=9&articleID=3862

A Tax Increment Financing extension across the expressway was approved at the commission level last Tuesday, allowing tax exempt Rush Presbyterian Hospital to tap into TIF funds north of the expressway. But the decision was made over the objections of residents who still want the money for parks, schools, and maybe a library.

My question, after I heard the project outlined, was why something of citywide (maybe even countywide) benefit was getting public funds from perhaps two square miles of the city. The answer, such as it was, was that the Department of Planning considered this the proper thing to do, also saying this TIF area had greater than expected funds.

Both aldermen in the TIF expressed their concerns for neighborhood projects and promised results, although they both supported the project. Why, indeed, does a small, if lately prosperous, scrap of the city cough up for something of much wider benefit? This is a curious reversal, however, of how larger areas have to pay for much more local benefits.

For about fifteen years now there has been a 1 percent restaurant tax in the area bounded by Diversey, Ashland, the Stevenson, and the lake to pay off McCormick expansion bonds. Not that exhibition halls should be tax financed, but the actual restaurant beneficiaries of McCormick conventioneers are confined to a much smaller area, a bit larger, perhaps, than the district to pay local matching funds for the defunct downtown trolley. This district extended to roughly 1200 N and 600 W, and followed the southern lakefront to about 2200 S. Yet the taco stands on Ashland Ave., which likely have yet to see a McCormick conventioneer, get nailed 1 percent for it.

In October 2006 a north side paper reported on half-mile sidewalk project for some $2.3 million, state-funded. This project presumably also funds sidewalk projects in DuQuion, Macomb, and Belvidere, out of some 3,000 Illinois municipalities. Who can possibly make an intelligent decision on funding sidewalks all over the state?

They should be funded by the good, old-fashioned neighborhood Special Service Area, which local taxpayers can keep track of much more easily.

If sidewalk projects succumb to the blandishments of something-for-nothing, how about major, federally funded transit projects? And when the mantra of local transit agencies is, “leave no federal dollars on the table?” And that even repeated by downstate Republican senate minority leader Frank Watson on Channel 11 last November, along with his tender concern for gambling and horse racing? So do not be surprised when a lot of these projects turn into excuses to blow federal moola.

Anyone who can make any sense out of the hundreds of local projects compiled by the Chicago Metropolitan Agency for Planning (nee Chicago Area Transportation Study), even at a special presentation, well, go ahead and try.

A retail sales tax has funded local public transportation for almost a quarter century. Retailing, however, does not add to the rush hour load, which is the major expense of a transit system. That is created by the downtown office industry, which sends everyone home at 5 p.m., and which is not assessed for public transportation. See the City’s Central Area

Plan which expects 1) a one-third increase in downtown employment and 2) a greater increase in public transportation capacity, since the highways are maxed out already. It does not say who is to pay for it. Anyone want to guess? A severe critic of public education allowed, some thirty years ago, that it worked tolerably well when it was locally controlled and funded. With state and federal funding, however, came all sorts of regulation and bureaucratic Babylon.

“Accountability” is a nice buzzword, but it is not what you expect. It is what you inspect. Let’s hear a little more about “inspectablity.” And a lot less about something-for-nothing.

The underlying idea is a proper connection between who benefits and who pays. TIFs mangle that connection all the time. There are beaucoup cusswords in legalese, however, “arbitrary” and “capricious,” which could be applied in a lot of TIF matters. There is also a once honored legal principle, that public taxation cannot be used for private benefit.

See Ann Durkin Keating, “Building Chicago,” for how this town was originally built on Special Service Areas.

William Wendt
West Town
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Why does this almost $1 billion project need $75 million in subsidies from the tax-payers when the Cook County health system is in crisis?
Anyone got an answer?