Chicago’s take from controversial Tax Increment Financing districts dropped by $56 million last year, an 11 percent decrease that could affect bond payments and payments to developers, according to Cook County Clerk David Orr.
TIF revenue for the entire county fell for the fourth straight year, declining by 10 percent, according to figures released by Orr’s office Wednesday.
Orr attributed the declines to falling real estate prices which have hurt property tax collections.
In seven Chicago TIF districts, including the downtown LaSalle Central district, revenue fell to zero.
Nearly $30 million from the La-Salle Central TIF was promised by Mayor Rahm Emanuel to help fund a development of River Point, a private 45-story office tower at 444 W. Lake.
Orr said the decline in TIF cash raises critical questions, such as “What are the legal and financial implications of falling revenue on TIF obligations for bonds or other developmental commitments like the River Point development in the LaSalle Central TIF?” But the city said River Point won’t be a problem.
“Any potential decrease in LaSalle Central TIF will have no impact on the River Point development, and it will proceed as planned,” said Kathleen Strand of the Mayor’s Economic Council.
“As part of Mayor Emanuel’s re-formed TIF process, we are more aggressively and regularly monitoring revenues in each of the TIFs
citywide,” Strand said.
City online data shows the La-Salle Central TIF had $20 million on hand as of January and was obligated to pay out $26 million through 2014 — on top of the money promised to the office tower. The city had projected the TIF would take in $12.5 million in 2011 instead of what actually came in: zero.
In the past, when TIFs have run short, the city has shifted money from other TlFs that had extra cash.
TIFs are a tool that cities can use to generate revenue for development in a specific area. They allow a city to divert all “new” property tax revenue for an area for up to 23 years, spending it on projects that will spur economic development. TIF’s are controversial because schools, parks and other taxing bodies do not get any of the new tax revenue.
TIF collections are declining as Chicago is coming under increased pressure to use the TIF funds to plug budget holes elsewhere.
Last year, Emanuel declared a $60 million surplus in TIF funds. About half the surplus was returned to Chicago Public Schools — the rest went to the city and other taxing bodies.
Despite the declines, TIFS still generate a river of cash, which doesn’t have to be accounted for in city budgets. Chicago got nearly $454 million in 2011, while Cook County suburbs collected $275 million.
Some suburbs had far greater declines in TIF revenues than the city. In East Hazel Crest and Bellwood, TIF revenue fell more than 90 percent. In Brookfield, Worth and Hanover Park it dropped by more than 50 percent, while in Matteson, Stone Park and Berwyn declines were more than 40 percent