A press release by the Sweet Home Chicago Coalition

March 10, 2010

Ordinance would funnel 20 percent of all TIF funds into affordable housing 

With neighborhoods across the city floundering in a wave of foreclosures, Chicago aldermen introduced a proposal March 10 to increase funding for affordable housing from the hefty surpluses accumulated in Tax Increment Financing (TIF) Districts.

Co-sponsored by 18 aldermen, the ordinance introduced Wednesday would mandate the city use 20 percent of all TIF revenues to subsidize the development and rehabilitation of affordable housing, a resource in drastically short supply throughout the city.  The measure would provide a resource to acquire and rehab vacant and foreclosed properties, thereby restoring the original purpose of TIF districts, a mechanism designed to revitalize distressed neighborhoods.  But critics say TIFs have too often been used to bankroll projects benefiting powerful corporations and developments catering to the affluent. 

“If you consider that very little development that is going on right now, using TIF to preserve and build housing that is affordable for people in our communities is a smart use of this resource,” said the measure's chief sponsor, 27th Ward Ald. Walter Burnett, Jr. “This ordinance does that and will serve as a neighborhood level stimulus plan to help get our city back on the road to economic recovery.”

The ordinance is co-sponsored by Alds. Willie Cochran (20th), Sharon Denise Dixon (24th), Pat Dowell (3rd), Bob Fioretti (2nd), Toni Foulkes (15th), Leslie Hairston (5th), Michelle Harris (8th), Lona Lane (18th), Richard Mell (33rd), Emma Mitts (37th), Joe Moore (49th), Ricardo Munoz (22nd), Toni Preckwinkle (4th), Gene Schulter (47th), Ed Smith (28th), JoAnn Thompson (16th), and Scott Waguespack (32nd).

The measure would designate 20 percent of all TIF revenues each year to finance the development and preservation of affordable housing.  To ensure that the reform serves populations most severely threatened by the housing crisis, it would require that all of the TIF-supported rental units are offered at prices affordable to households earning no more than $37,700.

The ordinance is championed by the Sweet Home Chicago Coalition, an alliance of community groups, housing advocates and organized labor, including the Service Employees International Union (SEIU), which has had a formidable impact on recent aldermanic elections. 

“In this difficult economic time, when working people are losing their homes and having to move farther away from where jobs are, it’s more important than ever that we use our TIF resources responsibly,” said Tom Balanoff, president of SEIU Local 1. “Targeting a portion of available TIF funds towards housing will help stabilize neighborhoods battered by the foreclosure crisis. It will also benefit the hard working residents of our city whose labor makes our city such a desirable place to live and do business.”

The ordinance aims to rectify an imbalance in TIF spending between projects that improve conditions for lower-income households and those that attract a wealthier demographic to the TIF District.  A report released last July by Sweet Home Chicago found that, despite the city’s chronic shortage of affordable housing, only 4 percent of total TIF revenues collected since 1995 have been used to alleviate that problem. The ordinance would ensure that TIF investments would help families stay in their communities as those communities improve.

In a TIF district, property tax rates are frozen for 23 years.  As the District burgeons with new development and property values escalate, the incremental increase in property taxes revenue is skimmed into a TIF account to support revitalization projects.  There are currently 158 TIF districts in Chicago containing a combined surplus of $1.3 billion, according to the city's 2008 TIF audits.