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Lightfoot Tightens Rules On Spending TIF Money For Private Developments

The new rules are designed to hold “private recipients of TIF dollars accountable to higher standards during the review and approval process,” the mayor said.

Mayor Lori Lightfoot is set to introduce ordinances on Monday formalizing her $12.8 billion budget proposal for 2021.
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CITY HALL — Mayor Lori Lightfoot moved Wednesday to tighten the rules permitting funds from Chicago’s tax-increment financing districts to be used to subsidize private developments.

Lightfoot touted the reforms as “sweeping” and said they were a step toward fulfilling her campaign promise to impose “rigorous standards that eradicate waste and abuse and ensure investments in economically distressed neighborhoods.”

The new rules are designed to hold “private recipients of TIF dollars accountable to higher standards during the review and approval process,” Lightfoot wrote in a statement.

TIF districts capture all growth in the property tax base in a designated area for a set period of time, usually 23 years or more, and divert it into a special fund for projects designed to spur redevelopment and eradicate blight.

At the mayor’s direction, the Department of Planning and Development will conduct a robust “but-for” analysis for all private applicants for TIF funds in an attempt “to guarantee that TIF funds are only used for projects that wouldn’t otherwise move forward,” according to the mayor’s office.

State law requires cities to conduct tests to determine whether development within a proposed TIF district would not take place unless the district is established. Lightfoot will now require that analysis for individual projects that request a TIF subsidy, according to the new rules.

“As I have said from the beginning, it is imperative that we use these limited resources responsibly in order to ensure we bring equity and economic development to the neighborhoods that need it most — exactly as TIF law is intended to do,” Lightfoot said.

That analysis will include an evaluation of data submitted by private developers in support of their request for a subsidy, officials said. Under former Mayor Rahm Emanuel, the Department of Planning and Development was criticized for not challenging that data and accepting firms’ claims of hardship at face value.

However, the revised rules do not rule out subsidies for private development, officials said.

Since taking office, Lightfoot has given the green light to TIF subsidies for two private developments: the plan to build an affordable housing complex in Logan Square and the effort to renovate the Ramova Theater in Bridgeport.

The proposal by Bickerdike Redevelopment Corp. envisions a seven-story building on the site of a 1.43-acre city-owned parking lot at 2602-38 N. Emmett St. The project relies in part on a $10.1 million TIF subsidy.

The effort to transform the long-vacant Ramova Theater into a live-music venue is set to get a $6.64 million TIF subsidy.

While both projects are worthy of TIF subsidies, most TIF funds are best spent on rebuilding Chicago’s infrastructure, including roads, bridges and schools, according to representatives of the mayor.

In addition, a committee created by Lightfoot to review requests for TIF funds will “center equity in its decision making,” according to the mayor.

Using an analysis developed by Chief Equity Officer Candace Moore, the committee will only approve expenditures if “they are aligned with the administration’s commitment to promoting equity citywide,” according to the mayor’s office.

In addition, Lightfoot said she will instruct the planning department to publish TIF spending decisions on a monthly basis and to create a “user-friendly version” of the city’s long-established online TIF Portal.

More changes to the city’s TIF districts are in the works, including the rules that govern how the districts are created — and terminated.

Just before Lightfoot took office in May, aldermen approved $2.4 billion in city subsidies to fuel two massive developments: Lincoln Yards and the 78.

Both megadevelopments faced fierce criticism that the subsidies were improper because they dedicated public resources to an already-wealthy part of the city.

A coalition of organizers sued the city last year in an effort to close the new Lincoln Yards TIF district, arguing that it had not passed the “but-for” test. The suit was dismissed after a judge ruled that the groups did not have standing to sue.