Where did Chatham’s TIF dollars go?

The Greater Chatham Initiative, announced this summer, promises to attract private and public dollars to once-thriving retail corridors in the neighborhood. This may sound familiar: In 2002, Chicago launched an economic development initiative in Chatham with similar goals — the 87th/Cottage Grove tax increment finance district.
But of the $22 million in property tax revenue captured from Chatham landowners between 2002 and 2015 in the TIF district, only 15 percent funded developments and public improvements in Chatham, according to an analysis by City Bureau. More than $14 million (or more than 63 percent) of the money was tapped to pay city bond debt as part of a controversial school construction project that still drains the city’s resources a decade after former Mayor Richard M. Daley pushed it through City Council.
Critics say it’s a misuse of the TIF fund, a program that uses a certain percentage of property tax revenue in the district to directly promote local economic development rather than distributing the dollars to city and county agencies. TIF money has helped subsidize hotels, businesses and housing, as well as parks and street improvements in so-called blighted areas. But affluent or white areas especially in the Loop and North Side have been the biggest recipients of TIF investment, drawing the ire of those who say taxpayer dollars are subsidizing private developments in prime real estate that doesn’t need a public handout.
The project siphoning millions of dollars away from Chatham’s TIF district (and others nearby) is a $1.26 billion plan approved by City Council in 2006 that aimed to renovate or construct nearly 30 school sites. Dubbed the Modern Schools Across Chicago program, Chicago Public Schools paid about $692 million, while the city pledged the remainder, $576 million, for which Daley issued city bonds.
In the 12 districts where the projects were located, Daley wed TIF revenue to repaying the bonds. He also tapped 18 nearby TIF districts to help pay, which is why since 2007 the 87th/Cottage TIF in Chatham has annually transferred an average of $1.6 million to the 71st/Stony Island TIF in South Shore to pay for the construction of South Shore High School.
That means Chatham residents’ tax dollars were going directly to a school outside their neighborhood, whereas, without Daley’s TIF/bond plan, the cost burden would have been shared among the entire city.
An additional $7.8 million of Chatham’s TIF dollars will go to pay off bond debt by 2019, according to city projections; as of the end of last school year, South Shore High School only enrolled 582 students, nearly 400 fewer than the $60 million building was designed to hold.
Ald. Roderick Sawyer (6th) says he wishes there were more he could do in Chatham via the TIF district, a cross-shaped stretch of 244 acres centered on South Cottage Grove from about 71st to 95th streets that was established to revitalize retail corridors and fund street improvements, among other goals.  Sawyer, who took office in 2011, says “money has already been pledged that I don’t have access to. . . . I’m put in this awkward position.”
He was not yet an alderman when, in 2010, City Council green-lighted the schools deal’s second phase despite gripes from aldermen that the city was misusing TIF, which at the time the Reader’s Ben Joravsky described as a “mini revolt in City Council.”
The vote was 36-10.
“Is it unfair? Probably,” Sawyer says about the arrangement. “But it is done. I can’t undo it.”

Help in Community

The 87th/Cottage Grove TIF has done some good in the community. About $2.65 million, or 15 percent of TIF revenue, was spent on developments and public improvements, including the renovation of Whitney Young Library. Since 2008, the TIF has given out $788,637 in small-business improvement loans.
TIFs in Black or high-poverty neighborhoods have a critical flaw: the districts typically draw in less revenue than districts in white and affluent neighborhoods where property values accumulate faster, according to activist Tom Tresser. When the city dips into such TIFs and moves money out of the community for something like Modern Schools, Tresser says that’s just adding insult to injury.
“I guess you can say the poorer communities are losing twice,” he says.
This report was produced in collaboration with City Bureau, a Chicago-based journalism lab. See an expanded version of this article at www.citybureau.org.


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