2015 TIF revenue up 24% in Chicago, down 5% in suburbs
Cook County Clerk David Orr announced today that Tax Increment Financing (TIF) revenue will jump 23.9 percent in the City of Chicago this year. Suburban TIFs will see a 5.4 percent decrease and Cook County as a whole will see an increase of 11.5 percent overall.
The Clerk's full 2015 TIF Revenue Report shows Chicago will collect $461 million in TIF revenue from its 146 TIFs in the 2015 tax year, an increase of nearly $89 million over last year.
Remarking on the findings of his TIF report, Clerk Orr recommends three ways to improve transparency and accountability:
- Public Debate – The City of Chicago will bring in nearly a half billion dollars in TIF revenue this year. This is an enormous amount of money. Clerk Orr calls for a real debate during the budget approval process in the City Council this fall regarding the allocation of these funds.
- City of Chicago Follow-through – Last year the City of Chicago stated they would be ending seven downtown TIFs early. A year later, one of the promised TIFs, Roosevelt/Canal, was retired five years ahead of schedule. What about the remaining six TIFs?
- Responsible Surplus – The City has declared a $116 million TIF surplus so far this year. It’s not clear which TIFs contributed to this surplus. Were projects cancelled? Was more revenue collected than was planned? A comprehensive audit might show that even more money is available to be returned as surplus.
The City provides general TIF information about the types of projects being funded, but it is more difficult to find specific details. “At what point can a taxpayer easily get to the specifics of how certain projects are chosen?” Orr asks.
The Chicago TIF increase is mostly due to the property tax reassessment in the City of Chicago this year. The Chicago triennial reassessment, which occurs every three years, resulted in a 9.3% increase in Equalized Assessed Value (EAV) citywide this year.
More than $25 million, though, is due to the City’s pension levy increase. The City of Chicago increased funding for police and fire pensions by $318 million this year, resulting in higher tax bills across the City.
The Mayor has already declared a TIF Surplus of nearly $116 million this year. This money will be returned to the taxing districts, like Chicago Public Schools.
Clerk Orr recently called for a change in the way schools are funded but in light of the $89 million increase in Chicago TIF revenue this year, and until the State Legislature answers the call for a more progressive funding system, an additional declaration of TIF Surplus seems the best way to help struggling Chicago schools. Additional TIF surplus may be required to help fund the proposed property tax rebate.
TIFs in the City of Chicago account for approximately 5% of the total City budget, yet it is still difficult for the average taxpayer to easily track the trajectory of these funds. Moreover, when TIF funds are not earmarked for specific projects, municipalities have broad discretion as to how that money is used; it can even be transferred, “ported,” to neighboring TIFs with few restrictions.
Clerk Orr has long called for greater transparency and oversight from all municipalities, and especially the City of Chicago, regarding TIF funds including the call to create a comprehensive, easy to follow “End of TIF Audit” when large TIFs, like Rosemont’s TIF #1, expire or are terminated early.
Additionally, Orr says the real challenge is easily finding the answers to basic questions such as: why a specific TIF project is chosen, how much TIF money was spent on that individual project, which developers are benefiting from the project and, ultimately, is this the best use of taxpayer dollars?
TIFs to Fund Public Transportation
The Illinois Legislature recently approved a new type of TIF, exclusive to the City of Chicago, which would run for 35 years and provide funding for public transit projects. The City would not have to demonstrate that these areas are “blighted” in order to designate them as Transit TIFs. Chicago Public Schools would be exempt from these Transit TIF calculations and other taxing districts, such as the Chicago Park District and Metropolitan Water, would receive 20% back from these TIFs each year. Reportedly, the purpose of these Transit TIFs is to match federal transportation funding for CTA Red, Blue, and Purple Line projects and the downtown Union Station “Master Plan.”
CPS Pension Increase
Governor Rauner recently signed legislation which will allow Chicago Public Schools to increase their property tax levy beginning next year to help fund contributions to teachers’ pensions. This increase would not be subject to the Tax Cap Law.
While the funding is sorely needed, this is yet another property tax increase for Chicago taxpayers who are already burdened by the state’s failure to adequately fund schools, Orr said. Adding that, “other than allowing local school districts to increase property taxes no solution has come out of the state.”
Taxpayers should expect to have a better idea of the overall impact of this legislation when the City of Chicago finalizes its CPS budget this fall.
CITY OF CHICAGO - TIF SUMMARY
City Hall cancelled two TIFs in 2015, including Roosevelt/Canal which was ended 5 years ahead of its 23-year lifespan. In addition, three existing TIFs: 119th/I-57, Belmont/Central, and Midwest were expanded by a total of nearly 10,000 properties (See Chart A).
The 119th/I-57 TIF tripled in size, up from 1,319 parcels in 2014 to 6,037 parcels in 2015, causing revenue to increase 34% from $2.6 million last year to $3.4 million this year. Reports available on the City of Chicago’s website indicate that this TIF is slated to fund projects including Renaissance Estates, which will create 86 new housing units, 20% of which are to be “affordable” to residents at 100% of the local median income level. Marshfield Plaza, a 415,000 square foot shopping plaza, is also to be funded from this TIF. The Chicago Park District will get TIF funds for rehabilitating a playground, building a new sprinkler area, as well as a new basketball court and athletic fields.
The Belmont/Central TIF nearly doubled in size, from 772 parcels last year to 1,553 parcels in 2015. Revenue increased from $2.2 million last year to $2.3 million this year. Overall, this TIF has generated $37 million since 2001. Yet only $787,000 has been invested according to information available from the City of Chicago, mostly through the City’s Small Business Infrastructure Fund (SBIF). Reports published by the City of Chicago also indicate that this TIF is funding a planned playground at Belmont-Cragin Elementary School. More money has been ported out of this TIF than has been utilized within its boundaries.
The Midwest TIF, already the largest TIF (by number of parcels) in Cook County, expanded 35% from 11,069 parcels last year to 14,910 parcels this year. Revenue increased by nearly 12% this year, from $13.3 million last year to $14.9 million this year. Overall, this TIF has generated $175.6 million since its inception in 2000. It appears, based on reports available from the City of Chicago’s website, that less than half of that, $79 million, has been invested or approved for investment. Projects reported by the City of Chicago include new and rehabbed housing developments, updated facilities for the Chicago Park District, including the Garfield Park Conservatory, as well as a Magnet School, and a plan to rehab former CHA housing projects.
- Other Chicago highlights from Clerk Orr’s TIF revenue report include:
- 7.3% of the taxable value in Chicago is tied up in TIF
- 20% (1 in 5) of all parcels in Chicago are in TIF
- Two TIFs were cancelled: one ran its course, one was terminated early.
- No new TIFs were added in Chicago, but three TIFs were expanded:
o 119th/I-57 TIF tripled in size
o Belmont/Central TIF doubled in size
o Midwest TIF was expanded by 35% (See Chart A)
- 114 TIFs had revenue increases.
- Six Chicago TIFs generated over $20 million each in 2015:
o LaSalle/Central ($26.7 million)
o Kinzie Conservation ($25.5 million)
o Near North ($24.9 million)
o Chicago/Kingsbury ($23.9 million)
o Canal/Congress ($23.7 million) and
o River South ($23.1 million)
- 15 TIFs – including the two that were terminated – did not collect any revenue.
- 19 TIFs decreased in revenue
The Clerk also analyzed mature TIFs in the City of Chicago (TIF districts which were created more than 10 years ago) to identify the most financially successful and least financially successful TIFs.
The most financially successful TIFs are clustered centrally, in the Loop and West Loop areas of the City, while the least financially successful TIFs are scattered about the south and southwest sides of the City. The primary objective of TIF is to spur economic growth in blighted areas. Unfortunately, it appears that failing neighborhoods that need revitalization the most are not seeing as much benefit from TIF as areas that are already thriving. Some other mechanism must be found to generate growth in the areas that need it most.
SUBURBAN COOK COUNTY – TIF SUMMARY
Countywide, $718 million was collected in the 439 active TIF districts. This 11.5 percent increase is mostly driven by the 23.9 percent increase in the City of Chicago.
Revenue for the 293 suburban TIF districts decreased by 5.4 percent in 2015, from $272 million last year to $257 million this year. This decrease is primarily due declining taxable value in the suburbs.
With the end of Chicago’s Near South TIF in 2014, Suburban TIFs have become the biggest revenue generators in Cook County.
- The Hoffman Estates Sears TIF still holds the title of largest active TIF in Cook County by overall lifetime revenue. It has collected $540 million since 1989, including nearly $28 million in 2015. Unlike most other TIFs that have a 23-year lifespan, the Hoffman Estates Sears TIF has a 38-year lifespan.
- The Glenview Naval Air Station TIF once again had the largest single year revenue collection this year at $32.5 million.
In recent years, the number of TIF districts in suburban Cook County has steadily grown. There are now TIFs in 72 percent of Cook County’s suburbs. While 16 suburban TIFs were terminated, another 23 TIFs were added in the suburbs, bringing the total to 293 TIFs in 95 suburban municipalities.
Other suburban Cook County TIF highlights:
- The very first TIF in Cook County: Rosemont TIF #1, has retired
o Active for 35 years
o $365 million in TIF revenue since 1986
o Averaged $15 million per year in recent years
o Each year this TIF brought in an average of three times as much revenue as the Village of Rosemont’s property tax levy
o Property value increased by a factor of 13 (Starting value of $12.3 million & ending value of $169 million) (See Rosemont TIF #1 “Fact Sheet”)
- Four Suburban TIFs generated over $10 million each:
o Glenview Naval Air Station ($32.5 million)
o Hoffman Estates Sears ($28 million
o Rosemont River Road ($14.9 million) and
o Cicero 1 ($10.5 million).
- 106 existing TIFs had revenue increases.
- 105 TIFs had revenue declines due to stable or declining taxable values in a non-reassessment year
- 82 TIFs did not collect any revenue in 2015.
- 16 Suburban TIFs were terminated: seven expired and nine were retired early (See Chart B)
- 23 new TIFs were created in suburban Cook County in: Alsip, Bedford Park, Berkeley, Bridgeview, Elmwood Park, Ford Heights, Forest Park, Franklin Park, Hodgkins, Homewood, Matteson, Melrose Park, Niles, Richton Park, Rolling Meadows, Roselle, South Chicago Heights, South Holland, Tinley Park, and Western Springs. (See Chart B)
- Three TIFs expanded in 2015 (See Chart B)
Visit TIF Viewer, a mapping application, to see TIF data at the map level and search by municipality, ward, address or PIN.
For a brief overview and refresher regarding 2015 TIFs, view our Quick Fact Sheet.