Yesterday, Chicago’s new mayor, Rahm Emanuel, took an important first step in improving city government by announcing reforms for Tax Increment Financing (TIF). Many have dubbed TIF Chicago’s “Shadow Budget” not just because its spending is out of control, but also because it’s been used as a political patronage piggybank. TIF has cost taxpayers $1.2 billion dollars across 159 TIF districts. Emanuel deserves high accolades for addressing this issue so quickly after taking office.

After taking the reins, the new mayor says he was shocked to learn that such a large program, about one-sixth of the official city budget, lacked basic standards like job creation and quality benchmarks. Emanuel was clear about what’s wrong with TIF and what needs to be done: “Over the years, it’s mutated,” he said, into subsidies for “downtown and high-rent areas.” Fixing TIF will require the program to “return to its roots” by targeting spending “for blighted economic communities” and ending the use of TIF “as a political instrument.”

Mayor Emanuel is taking various steps that Chicagoans should be enthusiastic about.

• First, he vowed that TIF will no longer be used as a political bargaining chip.
• Second, he promised that subsidies will not reward wealthy developers in Chicago’s Loop or other wealthy neighborhoods. (It’s unclear whether that proclamation also means that TIF subsidies will no longer be used to shift jobs from other parts of Illinois, as was the case in the controversial $35 million United Airlines deal.)
• Third, he promised to focus use of TIF subsidies on creating high-quality jobs in blighted neighborhoods, which was the original intention of program.
• Fourth, he appointed a task force to come up with ideas for improving the transparency and accountability of the program.

His announcement also came with an improved transparency website: www.cityofchicago.org/TIF. The effort is a good start. The website allows users to view and download subsidy information in a variety of ways. Users can search for and download digital spreadsheets of the data for their own analysis. It even allows users to peruse development documents signed with companies and disclosures about conflicts of interest and lobbying.

Unfortunately, the website isn’t perfect yet. For example, TIF districts and projects could be projected onto a single interactive map that allows users to delve deeper. The website lacks a section devoted to annual follow-up reporting on outcomes relating to jobs, wages, and clawbacks.

Again, congratulations Mr. Mayor. Reforming TIF will be no easy task, but Chicagoans deserve a transparent and accountable TIF program.

This entry was posted on May 20, 2011 at 5:51 pm and is filed under Illinois, Tax Increment Financing. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.