TIFs + Michael Reese = What About Bronzeville?
By Kate Gardiner in News on Aug 21, 2009 4:00PM
Here's a shock: there may be some financial shenanigans afoot dealing with the 2016 Olympics and TIFs. A few weeks ago, we took at a look at the city’s new TIF Sunshine website where you can see all of the city’s TIFs, what they’re for and where they’re boundaries are. Last winter, the city announced Michael Reese Hospital would be the future site of the Olympic Village should Chicago be awarded the 2016 Olympics. In June of this year, the City of Chicago bought Michael Reese hospital for $86 million and Mayor Daley later announced that a new TIF would be created to help finance some of those Olympic dreams. That didn’t quite gel; we thought the hospital was already located in the Bronzeville TIF. So we took a look at the TIF transparency website with Friend of Chicagoist Adam Verwymeren and, lo and behold, Michael Reese Hospital was already in the middle of that existing Bronzeville TIF.
By purchasing the Michael Reese site, the city has stripped it of its tax obligations. The sale, combined with the redistricting, means that any increase in property value will immediately go into the fund, and will for the life of the new TIF (the lifespan of a TIF is 23 years). It’s like buying a city-owned home for $100: you make some improvements, build an addition, and the neighborhood gets better. Suddenly, your house is worth $150,000. With property taxes assessed on a rotating three year cycle, the developer won’t see a jump in taxes until the next evaluation after the city sale. And any increases in taxes along the way will wind up in the new TIF (what Ben Joravsky terms Bronzeville II in his look at the subject).
Chicagoist called the Department of Community Development and asked what will happen to the Bronzeville TIF, which was supported in a large part by the property owner's tax payments. Seven weeks after the sale, a city spokesperson told us the city has not yet figured out where the TIF money will go. "We'll likely figure it out before the October meeting of the CDC," she said. "The consultants are working on it now." City officials speculated that there may be redistricting as a result of the consultants' reports.
With Reese at the hub, the Bronzeville TIF was set to earn at least $42 million, city documents show; the money was destined to attract at least $116 million before 2021, funds that has been slated for redevelopment in the neighborhood. If the city goes ahead with its TIF redistricting plans, (and Chicago planning attorney Joe Gattuso said "use of the [TIF] is at the discretion of the municipality,”), there will be a TIF within a TIF. With a second TIF in place, that money might not make its way into Bronzeville at all, instead being redirected towards something else (cougholympicscough). So what’s Chicago going to do with the funds from Bronzeville II? And why would the city want to create such a convoluted financing structure? That’s a question the city seems unwilling to answer.
**A city spokeswoman has since stated that there will be no double-TIFfing of the Michael Reese Hospital, though she could not confirm a date or specific timeline for the redistricting.
City officials speculated that a new TIF plan involving decommissioning the current Bronzeville TIF and recommissioning the area would be in effect, likely at the first Community Development Commission meeting after the Oct. 3 Olympic decision as the project has already missed the deadline for the September meeting agenda.
By redrawing the boundaries of the district, the area could again benefit from the property taxes of owners in the beleaguered South Side neighborhood, though none of the money would be guaranteed to the existing Bronzeville TIF fund. Where the money currently in that fund would go after decommissioning the current TIF remains unclear. [-Kate Gardiner 8/21/09]