Archive for October, 2012

Calling All Citizen Journalists – Let’s Investigate and Expose TIFs!

October 23, 2012

GUEST POST BY TOM TRESSER

I’m looking for citizen journalists to help investigate and expose Tax Increment Finance (TIF) district abuse in Chicago and Cook County–and then across Illinois. You probably know that TIFs are an often abused mechanism for funneling property taxes to special projects–ostensibly to fight “blight” and put development in under-served areas. In Chicago companies such as Home Depot, United Airlines, the Chicago Mercantile Exchange, Coca-Cola, UPS, Jewel-Osco, Target and Willis Insurance (who bough the Sears Tower) hav eall received tens of millions of dollars of property tax gifts via Chicago’s poorly monitored TIF program. So much for blight and the under-served getting development help!

I’m working on a new social venture enterprise, The CivicLab, to be a place for ongoing civic investigation and innovation. Our first effort is the TIF Report which is looking at the impacts of TIFs on a ward-by-ward basis in Chicago. We are developing data scrapping and visualization tools to bring the TIF story to life here. We are looking for writers, coders, web developers, app developers and graphic artists to help with this work.

This is a rough draft of the poster-size graphic our team is working on to illustrate what TIFs are and how much property tax the 12 TIFs that cover the 27th Ward on Chicago’s Near North side have diverted from local government over the past nine years. The idea is to publish this information on an easy-to-navigate web site AND distribute several thousand of these graphic posters through out the ward and meet with community groups to walk them through the information.

I came to the TIF work via my efforts to derail Chicago’s 2016 Olympic bid in 2009. As a co-organizer for No Games Chicago I was part of a group of all-volunteer concerned citizens that thoroughly debunked the hype surrounding Mayor Daley’s pet project that consumed the city for two years and which raised $90 million for marketing and expenses.

Part of the frame for pushing the bid was that the city was broke, but we sorted through local finances and came across a pot containing $1.4 billion in property taxes! These funds were found in the combined bank accounts of the city’s then 160 Tax Increment Finance districts. We had to get the separate reports of these districts and open them up, one at a time, and total the “Fund Balance” figures for each district.

No one had done that. No one (outside of City Hall) knew that these bank accounts held so much money. This was especially galling since the city was closed for three furlough days in 2009, public health clinics were closed, public schools were closed and the public transit system was placed on a budgetary “doomsday watch” twice.

We realized that the city was lying about its financial situation and making it impossible to maintain and grow essential public services – and, instead, were showering hundreds of millions of public dollars on private developers and well-known and well-off corporations. We started to really look into TIFs and other corporate give-aways.

TIFs have been around in Chicago since 1986 but they really started to take off in the early-mid-1990’s – some would say co-incidental to the rise of pin-stripe patronage in Chicago. TIFs and local government

Finance used to be covered by Jackie Leavey and the Neighborhood Capital Budget Group, but they are out of business. When 5th District Congressman Mike Quigley was a Cook County Commissioner, he was deeply involved in TIF reform efforts. The two top experts in Chicago now would have to be political reporter Ben Joravsky (see his work at http://www.chicagoreader.com/chicago/the-chicago-reader-tif-archive/Content?oid=1180567) and Prof. Rachel Weber of the University of Illinois at Chicago (Prof. Weber is on the CivicLab Advisory Council).

TIFs are coming out of the shadows and a number of civic players are angling to end them, use them or re-direct them. The Chicago Teachers Union foregrounded TIFs in their recent strike communications and pointed out that the city couldn’t be THAT strapped for cash if a TIF in the Hyde Park community was poised to shower $5.2 million on the construction of a Hyatt Hotel on property owned by the University of Chicago. Sweet Home Chicago is a coalition of social service groups seeking TIF funds for affordable housing initiatives. And the RAISE Your Hand Coalition is a city-wide group of parents of public school parents who also want money in the TIF accounts to go the Board of Education.

We see this as a national effort because TIFs are in every state but two and are subject to widespread abuse and lack of accountability. If you are interested in joining this combination of old school investigation, new school data visualization, and community organizing, please contact Tom Tresser at tom@tresser.com or 312-804-3230.

Wisconsin Leaves Taxpayers in the Dark

October 18, 2012

A new report released by WISPIRG details the failure of the state of Wisconsin to properly disclose whether its lucrative corporate subsidies are providing the promised benefits. Among WISPIRG’s findings:

  • Just 2 out of 251 entries listed in the state’s subsidy database detailed the projected and actual outcomes for the 2009-2010 reporting period
  • $8.2 million of those subsidies had no reported benefits to Wisconsin taxpayers
  • The newly created public-private partnership, the Wisconsin Economic Development Corporation (WEDC), couldn’t account for how much the privatized state agency has recaptured from recipients failing to meet performance requirements. In their response to WISPIRG, the WEDC claimed that it lacked the staff resources to compile that information.

This isn’t the first time WISPIRG has weighed in on subsidy accountability. In 2007, the group successfully led an effort to improve the state’s subsidy reporting. The resulting Public Act 125 requires the state to disclose corporate subsidy data in a searchable database. Prior to the creation of WEDC, that information was published by the Department of Commerce. The WEDC has not posted Act 125 data on its new website. Instead, that site has a hard-to-find link to the now defunct Commerce agency’s website. The old database is obviously outdated compared to standard practices in other states such as Maryland.

WISPIRG recommends the state do a better job implementing reforms that would ensure taxpayers know which companies are getting a subsidy and whether the state did anything to verify job creation claims. “Taxpayers shouldn’t have to be auditors to find out if the economic development subsidies we fund are delivering bang for the buck,” said Alysha Burt, WISPIRG Program Associate and co-author of the report.  “Even state auditors couldn’t quantify the outcomes of these programs because the information isn’t there.  For all we know, millions of our tax dollars could be funding junkets to the Caribbean.” The WEDC could start by putting a better Act 125 database on its website and featuring it prominently on the main page.

All of this comes on the heels of a deeply disturbing letter sent to the WEDC by the U.S. Department of Housing and Urban Development accusing the state of mishandling federal economic development funds. Shortly thereafter, the head of the WEDC resigned. And a June 2012 report by the state auditing agency, the Legislative Audit Bureau, found that state agencies were regularly failing to submit required compliance reports. Worse, the audit found that the newly created WEDC is required to disclose less information to the public than the old Department of Commerce did.

As our January 2011 report showed, the risks of privatizing a state economic development agency can lead to less transparency and accountability for taxpayers. In many respects, Wisconsin appears to be making the same blunders as other states that have gone down the path of privatization: resistance to accountability, questionable claims about the effectiveness of the privatized agency and misuse of taxpayer funds. Better data could ease those concerns.

And there are also conflict of interest issues. The new private-public agency has past recipients of lucrative subsidies deciding how the agency should operate. Companies represented on the board of directors include Logistics Health and FluGen. Logistics Health received at least $3.25 million in tax credits and loans, while FluGen collected at least $2.25 million. Logistics Health didn’t meet its projected job creation thresholds. According to the Act 125 database, FluGen didn’t even have job creation requirements.

We hope that WISPIRG’s report will serve as a wake-up call to taxpayers and legislators in Wisconsin and elsewhere. Without adequately disclosing subsidies, their purported benefits and outcomes, taxpayers will be left wondering why they have fewer services and/or higher taxes.

Subsidy Tracker Captures 18,000 New Listings

October 11, 2012

In the past month, the Good Jobs First Subsidy Tracker database has added more than 18,000 new listings of subsidy awards, bringing the search engine’s inventory to more than 245,000 company-specific entries from 385 programs in all 50 states and the District of Columbia.

Some of the new content comes from our effort to expand Tracker’s scope from state-level programs to those at the city and county level. This process is time-consuming, given that few localities put subsidy data online, and we must thus rely on open records request to get the information. Over the past month we have gotten replies to a dozen of those requests and uploaded the results. These include: enterprise zone data from Richmond, Virginia; municipal tax increment financing data from three cities in Maine (Portland, Bangor and Lewiston); property tax abatement data from South Bend, Indiana and San Antonio, Texas; and data on miscellaneous programs from places such as Oklahoma City and Asheville, North Carolina.

We’ve also used FOIAs to fill in some state-level programs that were previously undisclosed: Mississippi’s Major Economic Impact Act grants and the Tennessee Job Skills training cost reimbursement program.

Yet by far the largest source of new information was our painstaking update of the data disclosed by state agencies on the web. In recent weeks we have scanned more than 250 such sites covering some 300 programs and have retrieved new data for nearly half of them. (Most sites post new information annually.) Having completed this, we can now turn our full attention back to the hunt for locality data.

A complete list of the additions can be found in the Tracker update log. The full inventory of data sources is here.

New Model Legislation from Good Jobs First

October 10, 2012

Washington, DC, October 10, 2012 — Good Jobs First today released an updated version of its model state legislation to make economic development subsidy programs more accountable and effective. It can be found at: http://www.goodjobsfirst.org/accountable-development/model-legislation

 

“This model legislation is informed by our many years of grading the states on their economic development program rules,” said Good Jobs First executive director Greg LeRoy. “At a time when states must make painful budget decisions, taxpayer subsidies in the name of jobs should be transparent, fair and effective.”

“Our model language is derived from the best state and local laws Good Jobs First has found while issuing six 50-state “report card” studies, including Show Us the Subsidies, Money for Something and Money-Back Guarantees for Taxpayers,” said Good Jobs First research director Phil Mattera. “These are proven, common-sense safeguards that every state should consider as a baseline.”

The legislation is designed to apply to every major kind of economic development subsidy that a state legally enables and which in turn is administered by either the state or by local governments. They include: corporate income tax credits (for job creation or retention, research and development, film production, etc.); property tax abatements and reductions; enterprise zones; tax increment financing districts; training grants; loans and loan guarantees; sales tax exemptions and rebates, and others.

The model legislation has four parts:

Disclosure: company-specific annual reporting on the Web of the costs and benefits of every deal, including Unified Reporting of Property Tax Abatements and Reductions to disclose online when local property taxes are lost that would otherwise fund schools and other local services;

Job Creation and Job Quality Standards: to make sure the cost per job is not excessive and that public subsidies help to raise living standards, not lower them;

Clawbacks and Rescissions: to ensure that deals are carefully monitored and that companies pay subsidies back (or lose future subsidies) if they fail to deliver on jobs or other community benefits;

Unified Economic Development Budget: to provide state legislators with a full annual accounting of every kind of expenditure the state makes for jobs to make sure that any budget cuts are fairly applied to less-visible corporate tax breaks, not just appropriations such as grants or loans.

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Good Jobs First http://www.goodjobsfirst.org is a non-profit, non-partisan resource center promoting best practices in state and local economic development and smart growth for working families. Based in Washington, DC, it includes Good Jobs New York http://www.goodjobsny.org.

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