How Mayor Daley TIF’d Chicago And Other Cautionary TIF Tales

by William Skink

I know I’ve said this before, but I’ll say it again: Missoula is not unique. Our housing problems are not unique, and the alleged solutions being proposed are not unique. 

 I’ve focused my criticism of Tax Increment Financing primarily on how Missoula has used it, but with Councilman Ramos taking his criticism to the swamp, I thought it might be interesting to see how other communities have used TIF to prime the pump of development.

Wouldn’t you know the center of political integrity in America–Chicago–exemplifies what one can achieve with TIF loot and political ambition. The article is from 2011, so it’s a little dated, but it’s still worth reading. Here’s snip:

Mr. Daley vigorously championed the use of TIF. By the end of his tenure in May, city officials had established more than 160 TIF districts that covered about one-third of Chicago. In total, the districts capture about $500 million a year, city and Cook County documents show.

The amount is equal to about one-sixth of the city’s annual core budget, although under Mr. Daley the money was not tracked or approved as part of the budgeting process, and his administration provided only a vague accounting of its TIF activities.

Mr. Emanuel has already made marked improvement in transparency by making TIF data public. He has promised to detail the flow of TIF dollars in his first city budget proposal, due in October.

Mayor Daley was an even drunken sailor than sailor Engen when it came to throwing around TIF largesse. According to the article, over his tenure, Daley spent 1.7 billion dollars in TIF money. Around 700 million of that money benefited private interests. Like Missoula, TIF money was also used in Chicago to cover budget problems–problems that wouldn’t exist if this skim & give scheme wasn’t siphoning cash from Chicago’s general fund.

Oh, that’s just Chicago, you might say, they can corrupt anything. But beyond Chicago there exists the larger question of whether or not TIF functions as advertised. Here’s a more recent article, titled Does Tax Increment Financing Really Work? Usually, No.

After describing how TIF is suppose to work, here’s the part that describes how it actually works:

Critics often charge that it funnels money out of the taxpayers’ pockets into a special fund that, by and large, works in a pretty opaque manner. While some of that money funds essential public works, much has also gone towards erecting new Whole Foods, renovating glitzy hotels, and building stadiums—the type of projects, one might argue, should not require such incentives. And the evidence Merriman analyzes suggest they may have a point. He shows that, in most cases around the country, the tool did not fulfill its main goal of boosting economic development.

“On average, [TIF] may be moving development from one part of the city to another, and changing the timing of the development, but there’s not more development than would have otherwise been made,” Merriman said.

In addition, this is a tool with several drawbacks. According to Merriman, TIFs might “capture” some tax revenue above the capped “base value” that may have been generated anyway through natural appreciation in property values if the TIF hadn’t been created. This is money that taxpayers might have otherwise paid directly towards an overlapping school district, or for public services. And while TIF is not a direct tax increase, it may lead to higher rates or service cuts elsewhere, if the city plans on bringing in the same general property tax revenue as before TIF.

It’s incredibly important to understand how all this works as the city of Missoula gears up to ask taxpayers to shoulder another bond to help address the affordable housing crisis. When you understand the skim & give scheme, that ask becomes offensive, as does the effort to put the majority cost of new sidewalks on home owners when Marriott Andy gets millions for his hotel sidewalks.

Hell, if Missoulians start figuring this out they may even want to know things like how much public money does MRA actually have in its piggy bank?

Or, maybe they’ll get radical and say, screw it, let’s get a voter resolution on the ballot to absolve MRA and its board and put control of the piggy bank directly into the hands of city council. That way, if us lowly citizens don’t like how our money is being used, we can vote the bastards out.

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About William Skink

I'm a poet and political cynic living and writing in Montana. You can contact me here: willskink at yahoo dot com
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