Chicago and Cook County property owners: When your tax bill arrives in the mailbox in the next few weeks, don't just write a check and send it in. Read the fine print. You might learn something that's been a well-kept secret.
For the first time, every owner with property in a tax increment financing district will see exactly how much of his or her money flows into a TIF. That's money that doesn't go to your schools, parks and other taxing bodies and until now was not itemized. The money may be well-spent. It may be poorly spent. But with this tax bill, many people will learn for the first time how much they are contributing to this economic development tool.
Tax increment financing has become more controversial in recent years, especially in Chicago, as government budgets have tightened. To critics, TIFs divert taxpayer money that would otherwise go to schools and other taxing bodies into business district infrastructure and other improvements. But to supporters, TIFs are a smart tool that, when applied correctly, spur economic development in neighborhoods desperate to improve their business climates.
A one-paragraph backgrounder: TIFs are designated areas within cities and towns that are allowed to freeze assessments and then siphon off a portion of property taxes. As property assessments rise over time, the extra portion of tax revenue stays within the TIF district itself to be spent on roads or other amenities that make the area attractive for more business development. TIFs are supposed to expire after 23 years, returning to the tax rolls more productive, lucrative properties than before the TIF existed.
But several factors have contributed to the controversies over TIFs: In Chicago, they have been used in bustling downtown areas — hardly "blighted," which was the law's original intent. City Hall for years did a poor job of showing how TIF money was being spent. Transparency has improved under Mayor Rahm Emanuel. But questions constantly arise over whether TIFs are slush funds for stashing taxpayer money that will be spent as city government wishes. It's true that TIFs have been used as piggy banks to plug financial shortfalls for schools and other governments. So were they serving their original purposes or those of politicians?
Emanuel's administration has slowed the development of new TIFs. Under former Mayor Richard M. Daley, they sprouted in just about every corner of the city.
Chicago Public Schools receives millions in surplus TIF money each year — money that builds up in a TIF fund but isn't committed to a shovel-ready project. Yet there's always an effort to get more. Most recently: Some aldermen are exploring TIF revenue as a way to pump more money into underfunded city pensions, perhaps by borrowing against future TIF proceeds.
No matter your opinion on TIFs, how much each property owner paid into them was a mystery. Tax bills listed TIFs but left blank the exact dollar amount being diverted into them. So while it appeared a certain portion of property taxes was going to, say, local schools, a chunk of that money — maybe a big chunk — was actually going to the TIF.
Now it'll be in writing, thanks to Cook County Clerk David Orr's office. About 1 in 5 city property owners and 1 in 8 suburban property owners have some portion of their property tax payments shifted into a TIF.
Now they'll be able to see how much.
Will that amount strike you as too much or too little?
Orr reports, you decide.