The Chicago City Council again postponed a vote on the Sweet Home Chicago Ordinance, which would require the City to set aside 20% of the tax increment generated in the TIF districts in Chicago for affordable housing and foreclosure remediation.  While Ordinance sponsor Alderman Walter Burnett (27^th Ward) believed he had enough votes to pass the Ordinance, the vote was again delayed during the January 13^th City Council Meeting, this time based on a procedural requirement that notice of an additional item on a municipal agenda be provided more than 48 hours in advance of the municipal meeting.

Alderman Burnett believes that he will be able to get the Ordinance on the agenda for next month’s City Council Meeting and that he still has enough votes to pass the Ordinance.  However, if the vote is delayed beyond next month until after the February municipal elections, Sweet Home Chicago supporters fear that a new Mayor and new Alderman will have different ideas on how TIF dollars should be spent, which may result in a loss of support for the Sweet Home Chicago Ordinance.

Letter To The Editor As Printed December 13, 2010

Tax-increment financing has succeeded dramatically in Chicago, helping to leverage billions of dollars in private investment and create upward of $500 million annually in new tax revenue set aside for capital projects and future economic development (“Review, rewrite law to rein in TIF districts,” Our View, Nov. 22).

Critics rip TIF as an all-purpose subsidy for favored projects, claiming excess funds are retained by the city without sufficient accountability. Crain’s supported Cook County Clerk David Orr’s proposed moratorium on new TIFs, echoing this ill-advised and poorly thought out call to arms against this too-successful economic development program.

TIF districts must meet state guidelines that include how the funds must be spent. Mayoral candidate Rahm Emanuel has some good ideas about using excess funds for police (although it might require a little juggling to comply with state law). Mayor Richard M. Daley is releasing $180 million in surplus funds to the taxing districts. Hasten the political debate regarding the use of excess funds, but don’t kill the golden goose.

Who benefits from a TIF? An exhaustive analysis by our firm of the 154 TIF projects in the city from 2000 through 2008 (the most complete data at the time) determined that more than half of TIF funds were allocated for public infrastructure, educational or public facilities and housing including affordable components. So the private-development incentives that created the new tax revenues were balanced with capital spending for public benefits.

SAMUEL POLSKY
Principal, Polsky & Associates Ltd.

To view the article as posted in Crain’s, click here.

Since 1999, the City of Chicago has been using TIF funds to assist existing single and multi-family residences through the Tax Increment Finance-Neighborhood Improvement Program (TIF-NIP). Based on our recent review of the 2009 Chicago TIF District Reports, the City of Chicago has pledged approximately $29 million to the TIF – NIP and based on information available on the City of Chicago website, the TIF-NIP has paid $17.9 million in TIF funds since 1999 to repair approximately 2,700 housing units in 17 communities throughout the City.

The TIF-NIP is designed to preserve existing residential properties located within TIF areas and to keep them affordable.  It provides residential property owners with grants for both exterior and interior home repair.  The TIF-NIP includes two types of programs, the Single Family Program (SFP) and the Multi-Family Program (MFP). SFP funds are for properties with a maximum of four residential units. The SFP maximum grant amount ranges from $12,500 for a one-unit property to $22,500 for a four-unit property.  Owners of apartment buildings with more than four units are eligible for MFP funds in an amount equal to $5,000 per unit up to a maximum amount of $100,000 per building.  Eligibility for the SFP and the MFP is determined by household incomes of the owners and the tenants. In order to receive the maximum benefit, household income level must be less than 100% of Area Median Income (AMI) for the SFP and less than 80% of AMI for the MFP.