In the past, I have posted investigative reporting articles printed in the Chicago Reader about the TIF Districts in this area. The current issue has yet one more incredible article detailing exactly what is happening with the spending of these funds. Along with this article, here is the archive of Reader articles over the years giving one of the best lessons in use of incentives for economic development. Yes, I know that you are thinking how does this apply to the local scene. The lessons apply because Champaign just extended the TIF district east of the railroad tracks along University for one more year and probably will propose further extension. And probably more importantly, the 155 districts in the Chicago area are costing Illinois residents tax dollars to support the Chicago schools.
Pattsi Petrie
This is interesting, but not easy to follow. Maybe that's just the way they like it. : )
To B for Business @ 6:40 P--the recent article probably would have more cogency if one read the whole series of articles. I understand completely that this is a large task. If I were still teaching economic development, this series would be a must read in a course.
Pattsi Petrie
I posted on this awhile back. Basically, it's a scheme for the Daley administration and his business partners to siphon tax dollars out of education and other city services. They do this by cheating law on how TIF districts are formed--i.e. proclaiming the richest districts in the city as "blighted". He uses this to fund his cronies' development projects--who then support his machine.
Who ends up paying for it? You do. And by "you" I mean downstate. Due to the TIF cheating, Chicago is labeled as a needy school district, so we get state funds for education to get us to the foundation level. If it weren't for Daley's schemes, that money would be distributed more equitably to downstate districts who really have low tax bases.
We are currently extremely active fighting Daley on this issue in Chicago. But much of the law--his control over the school district, his cheating the TIF rules, are handled at the state level. I would love to collaborate with downstaters and downstate politicians to fight this injustice.
Of course, it would take people getting over the existing politician divisions. But I'd be happy to work with anyone willing to oppose Daley's demogougery, whatever party they belong to.
"Of course, it would take people getting over the existing politician divisions. But I'd be happy to work with anyone willing to oppose Daley's demogougery, whatever party they belong to."
http://www.ncbg.org/tifs/tif_pays.htm. I liked this summary of the alleged problem and proposed solution.
I am not against the idea of TIFs. I am certainly against using them as a tool for political misconduct.
If a city is going to implement a TIF and arguably take money away from the other taxing districts, it would be better if the proposal was directly endorsed by the voters. Ideally, the voters would demand a level of detail and transparency that would eliminate potential political misconduct. I appreciate that we can't have the voters endorse every proposal, but these big ones are worthy of that consideration. Locally, I do not believe that the city of champaign voters would have endorsed the idea of extending a tif district and giving putting all that money into one development in downtown champaign. We'll never know.
"I would love to collaborate with downstaters and downstate politicians to fight this injustice."
What are your ideas for this? You might have downstaters listening to you if it involves us protecting ourselves from Chicago style policians who are ammassing astronomical deficits in the city of chicago and state. Unfortunately, the same people who thrive from political scams are in the drivers seat in Springfield. I'm not confident any such collaboration would bear much fruit.
NCBG is an interesting group and informative web site. Unfortunately, the group ceased to exist in 2007.
Pattsi Petrie
What are your ideas for this? You might have downstaters listening to you if it involves us protecting ourselves from Chicago style policians who are ammassing astronomical deficits in the city of chicago and state. Unfortunately, the same people who thrive from political scams are in the drivers seat in Springfield. I'm not confident any such collaboration would bear much fruit.
The people in the driver's seat are there because they have successfully cultivated the "Us vs. Them" ideology that downstate so fully embraces. The reality is that a poor white rural family has EVERYTHING except race in common with the poor black or latino (or asian or white) urban family.
So they vote for the machine politician insiders who will fight vs. downstate "conservatives". But the Chicago democrats are not liberal in any sense of the term.
The Chicago style politicians amass deficits because they are siphoning money AWAY from social safety nets, not towards them. Downstate tends to not care when it's in the city, but the money stolen from Chicago residents drives the machine that steals from the state.
I would start by returning CPS to elected school board/state control and immediately dump all improperly "blighted" TIF zones' accounts into the general fund. That would immediately restore between $1-2 billion (with a "b").
I would also establish statewide standards of services across all counties controlling for cost of living for each area. I would create a new standard budget for each state service and program FROM SCRATCH so as to root out all of the existing efficiencies. I would start with all current benefits and compensation intact, so as to merely root out the corruption and illogical appropropriation.
I would then take any preliminary plan and run it by focus groups from both the communities served by the programs and the employees of the programs to check for feasibility. I would expect to reduce the state budget by at least 20% without cutting anything that actually does anything for residents. It may be more, depending on how much the current administration is fudging the numbers--believe me, they are.
That would lead to a second step, as to my understanding, we would need to cut spending by more like 25% to reduce the deficit. I would expect the state to share this additional 5% cut equally across the whole state. There would be no political pandering or fighting for one's own district.
I believe we could actually do this and actually have a surplus if we got creative. I would divert the huge amount of fat in incarceration of non-violent offenders toward rehabilitation programs which tend to be FAR less expensive. I would cut all bonus state grants and bond issues to data failing magic programs like politically connected charters (see UNO's $90 million bond issue with their outdated failed 80s monolingual curriculum for the Hispanic community).
This probably sounds impossible, but we've done it successfully in one tiny community here. I think it's feasible--you'd need a team extremely smart, extremely good at listening, and fearless and tireless. They would have to work 18 hour days (believe me, not impossible) 7 days a week, and demand regional units to--if they couldn't do those hours--at least be available at weird times to meet. They would have to be charismatic and able to crush cynicism so that people would be motivated to be honest in their reporting and accounting (for some for the first time in their lives).
You see, we currently have a system where people are afraid of telling the truth because the state government (and many city governments--at least the largest one) is too busy running its electoral politics to actually be interested in what's going on. If you tell the truth about your program, you won't get funded. If you game the system, and play the politics, you win the riches. We need to turn that on its head.
We need a group running the state that demands truth. And doesn't punish people for the truth. So your program isn't working. We still need that program. You have two days to figure out how to get it working. No BS. If you need help, ask. Good luck. Peace out, etc.
I think it can be done. I hope those of you in politics get it done.
If not, check back in a decade when I'm ready to move back to CU. If you've still got that trainwreck of a mayor, I'd be happy to take over :P
NCBG is an interesting group and informative web site. Unfortunately, the group ceased to exist in 2007.
You are doing great research Pattsi.
FYI, it didn't merely cease to exist. It was defunded as it was one of the last community organizations that was monitoring City Hall's corruption.
"Downstate tends to not care when it's in the city, but the money stolen from Chicago residents drives the machine that steals from the state."
No argument here. But they do send it back down for 52/103 races.
"I would start by returning CPS to elected school board/state control and immediately dump all improperly "blighted" TIF zones' accounts into the general fund. That would immediately restore between $1-2 billion (with a "b")."
The TIF has created additional revenues that are designed to be reinvested into the development of the community. I am not against this idea. You saying that "all" funds should be put in a general fund defeats the entire purpose of the TIF fund. Since you can't go back on the deals with developers who have invested money into the community (shady connections or not), you have to take a "from this point forward" approach. That said, you possibly hurt opportunity for additional growth. Lobbying for a reasonable share of growth be shared is reasonable. Freezing property tax money from a newly designated TIF district for up to 27 years is agressive, but even then TIFS are supposed to be applied in neighborhoods where the EAV is decreasing, so in theory it's a win-win. I would not suprise me if Daily is getting creative.
This is interesting.
Voted to front page. Excellent article and comments. Must admit I'm feeling overwhelmingly cynical about the chances of any movement for common ground at the moment. The corrupt power brokers seem to have effectively dug in and fortified their positions. The avoidance of any culpability with the Blago nonsense was so successful my head is still spinning. The national climate of party purification, especially on the gop side, has finding common ground tantamount to treason. A republican associating with a community organizer could elicit a national backlash of opposition funding to stop "the march to communism!" Sigh...
That said, with the abject failure of both parties in Illinois, it seems to be an ideal time for voters to demand an end to all of the nonsense. Being able to rally enough folks together behind the idea to hit a critical mass to start pressuring/forcing reforms is the holy grail. Overcoming the masters of coalescing people to support banging their heads against the wall even harder to solve the problems is a lot easier said than done though.
--
Glock21 Op/Ed
The point is that TIF districts in Chicago are NOT increasing development "that would not happen without" the TIF in any sense except the literal.
There are literally a billion dollars sitting in TIFs currently in Chicago and the last I checked more than 95% of that was tied up in TIFs that are illegal--i.e. non-blighted districts that would see investment anyway.
I would totally support an auditing process to ensure that dollars that have already been committed to legitimate non-clouted projects are not recycled back into the general budget.
But I have to wholeheartedly disagree that in our worst budget crisis in our lifetimes, we merely kiss a billion dollars goodbye and look forward. It's essentially the same as saying, "He stole my car, but that was before I got an alarm, so it's all good, I'll just get an alarm on the next car."
"There are literally a billion dollars sitting in TIFs currently in Chicago and the last I checked more than 95% of that was tied up in TIFs that are illegal--i.e. non-blighted districts that would see investment anyway."
If I read correctly, they define blighted district as one where property values are decreasing. By that definition, most of Chicago could be blighted. It should be more clear what is defined as blighted. If I understand the process correctly, you do not need to demonstrate that a TIF district remains blighted to extend the district. I suspect that a city will extend a TIF district as long as possible. How else would they pay for a tram?
"I would totally support an auditing process to ensure that dollars that have already been committed to legitimate non-clouted projects are not recycled back into the general budget."
I suspect the conditions you put on that statement are going to rule out most projects. : )
The original intent of TIF districts has been lost in translation. :-) This provision was put in place to help communities, such as East St. Louis and East Peoria along with very depressed neighborhoods within cities. :-)
Pattsi Petrie
Well, as I understand it most of the academic literature (ie. disinterested and scientific) finds little support for the effectiveness of most TIF districts.
Why not do things the old fashioned way? If a municipality needed to pursue a project to promote development it would raise the capital by selling bonds backed by a specific revenue source (eg. a municipally imposed fee or tax) and the full faith and credit of the municipality. That way the taxpayers of the entity making the investment bear all of the risk of its failure.
The great attraction of a TIF is that it shifts risk to other taxing bodies and, often, to individuals outside the jurisdiction making the investment. This consitutes a serious moral hazard since the folks taking the risk are not bearing all the risk.
The other advantage of bond financing is that it imposes some market discipline on corrupt or cockamamie schemes cooked up by local politicans and economic development wonks.
TIF doesn't work anywhere.
It's not a bad idea in theory -- unless you think there's something anti-social about usurping revenue from schools, parks etc. for 30 years.
Moëtry in the Potion
Pattsi "Front Page" Petrie. Is it just me, or does that have a nice little ring to it. Congrats Pattsi.
TIF doesn't work anywhere.
Sure it does. Look at some of the smaller communities around here for examples.
To Michael @ 2:34 P--how do you know that TIF has worked for the small community? How much has it actually cost the community to entice economic development through this means rather than other established economic development methods? This is the major problem with this concept. No one stops long enough to do the economic analysis of cost to the community and if there actually is economic gain. Since I did my masters thesis analyzing TIF districts, the conclusion was that only very, very, very economically depressed communities gained using this method. Others never regained the investment/loss by using TIF and especially all of the allied taxing bodies.
For the nth time, I recommend Greg Leroy's book, The Great American Job Scam, to better understand about TIF and Enterprise Zones along with suggestions of other means to encourage economic development. Even though written by an economist, it is an easy read.
Pattsi Petrie
If I understand the process correctly, you do not need to demonstrate that a TIF district remains blighted to extend the district. I suspect that a city will extend a TIF district as long as possible. How else would they pay for a tram?
It's worse than that--in the case of the "blighted" central loop, not only did they extend it to the maximum, but the Mayor pushed to extend it years beyond the ridiculously long maximum time.
For all the corruption and nastiness and the fact that I never voted for him a single time, I do respect that Blago stood up against Daley on this issue. When it was finally allowed to expire, the Central Loop alone was diverting nearly $200 million per year from the general fund or approximately $100 million per year from schools.
It was basically a way to reinforce property tax districts to get around the county and city tax codes which lead to some equity.
I find the above comments about TIF districts interesting. Years ago the City of Bloomington established a TIF district on the east side, just east of Veterans Parkway. As I recall the City hired a consultant who specialized in the art of what was required to establish an area as "blighted". The largest single piece of the TIF was at that time a farm of about 20 or 30 acres or so. So how do you establish that a farm is "blighted" you might wonder - well there was an old barn and small pasture area in the corner not planted in corn/beans which I believe was being leased by someone raising horses. The barn was in need of a paint job and repairs - thus the entire farm was "blighted". I read the document - I was amazed. So what became of that farm - it became a shopping center area (Lakewood Plaza) anchored by the first Wal-Mart in Bloomington-Normal. The developer who had good political connections with the mayor and council made out very, very well. Wal-Mart no doubt got a better deal than otherwise (as if Wal-Mart would not have build somewhere anyway.) The school district and other taxing bodies lost out. Arguably the tax-payers lost out. And now the irony of it all, Wal-Mart has long since moved to a much larger store. What was Wal-Mart has been vacant for some time now. Lakewood Plaza looks rundown - perhaps as run-down as that old barn looked.
I'm convinced that TIF's are by and large abusive to the public interest and are largely a tool to reward the politically well-connected at the expense of tax-payers.
TIF districts are like any other economic developement tool, it can be abused and misused or it can lead to economic development. Most abuse comes from the 'elected', who only think of themselves, their terms in office and not the long term economic impact on people who elected them.
"Most abuse comes from the 'elected', who only think of themselves, their terms in office and not the long term economic impact on people who elected them."
It would seem reasonable that we remove as much control from elected officials as reasonably possible. : )
I think we also need to redefine business as well. If business is going to get massive public bonuses, they should have the public welfare as a priority in addition to profit motive.
All much as this may catch criticism for being "anti-capitalist". I think we can all look at historical scenarios (slavery, WWII profiteering on genocide) that demonstrate that none of us believe in completely unfettered capitalism. We simply need some controls so that those who abuse the welfare of our society for profit are held in check, not held up as models.
"If business is going to get massive public bonuses, they should have the public welfare as a priority in addition to profit motive."
The number of businesses that give back to the community over and above their tax obilgation is staggering. Now is the season to appreciate all that businesses do for their local communities. You don't have look very far before you notice another business making a charitable contribution or donating resources to a great cause. I certainly appreciate that.
"We simply need some controls so that those who abuse the welfare of our society for profit are held in check, not held up as models."
I think the folks from Chicago need to get control of their own business before they start telling me how to control my business.
The abuse of TIF funds is much more concerning to me than a businesses exercising poor judgement where I still have a choice to purchase products and services from them.
Both the 'elected' and businesses need to held accountable for their actions or better yet, take responsibility for their actions. Neither currently believe in accountability or responsibility.
The last Republican administration without regard for the American people, spend like drunken sailors, invaded two countries, increased the federal work force, increased the government workforce, bailed out investment banks while cutting taxes on the wealthest section of our population. So the voters held them accountable and changed administrations as well as congressional representatives. With nothing in the coffers, the current Democrat administration is spending future generational income, trying to withdraw invasional armies from two countries, find monies to fund the government workforce, bail out failing industries, control health care costs while increasing citizen coverage and increase revenue. The voters will hold them accountable at election time.
The investment banking together with the psudo government agencies of Fannie Mae/Freddie Mac, and auto industries spent like drunken sailors without accountability or responsibility and they are supported by the 'elected'. B for B thinks its reasonable to removed control from elected officials. I completely disagree. We do have some transparency with government controls and voting power over the elected. Business is conducted behind close doors without control and like the health care industry, they consistantly fight any accountability and take no responsibility.
Just a thought/observation--not one Champaign resident spoke against the extension of the East University Ave. TIF District at last Tuesday city council meeting. I understand the extension was just one year; however, some of the onus of what is happening in the use of economic development incentives falls on the shoulders of the residents to speak up. Yes, I thoroughly understand that people have less and less discretionary time and energy to be active citizens. So the politicians play on this in constructing legislation that enhances the path of least resistance--in the case of economic development is TIF and Enterprise Zones; in the case of school budgets is the 1% tax increase that will become effective as of 1 Jan 2010. A significant number of citizens did not want to put forth the effort to defeat the latter and find a more equitable method of funding. So where does this leave the situation--lots and lots of educating the citizens so they better understand the long-term effects of whatever legislation is being proposed. This probably is too slow for Xian and B for Business. :-)
Pattsi Petrie
"I understand the extension was just one year; however, some of the onus of what is happening in the use of economic development incentives falls on the shoulders of the residents to speak up."
The city council has a simple vote. Do we give ourselves more money to improve the city or do we give ourselves less. Convincing the city council to voluntarily remove money from their own table is going to be a challenge. Did anyone vote against the extension?
To B for Business @ 9:15 A--the vote was unanimous. :-) Nary a comment from the school district or park district.
Pattsi Petrie
Good idea Pattsi.
I think the Champaign school board and parks board should vote on non-binding resolutions regarding additional or continued TIF siphoning.
Moëtry in the Potion
"The city council has a simple vote." You are so wrong, it is very complex as the offsets have to be reviewed, the time value of money has to be considered as well as the viability of all the aspects of the proposal. Maybe you should attend a few council meetings for experience B for B.
"Maybe you should attend a few council meetings for experience B for B."
I got the jist from those who were there and my assumptions were confirmed.
"Maybe you should attend a few council meetings for experience B for B."
Not only was there was no comments from the pubic, there was no comments from the council before they voted unanimously. In a memo dated November 25th from Steve Carter, the city provided an analysis in section h of that document. Is this the kind of complex review that you had in mind? Looking back, after Pattsi pointing this out, I MAYBE would have asked a few questions after reading the document.
Since 1999 the district has experienced an average of 4.7% growth over the past five years. I'd be interested to see the growth compared to non TIF districts for the same period during the five years and the same comparison for 5 years previous to the TIF district being formed in 1999.
I'll admit, I'm somewhat curious but I don't think any answer would change the vote.
Life is a lot more interesting and rewarding if you participate rather than get "the jist from those who were there..."
"Life is a lot more interesting and rewarding if you participate rather than get "the jist from those who were there..."
But you don't know what I was doing during the meeting. : )