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Byrd: TIFs a bad idea from Chicago to Iowa City

BY MATTHEW BYRD | JUNE 25, 2014 5:00 AM

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As a proud Chicago jingoist — an ingenious term coined and applied to me by one of my high-school friends — I think it’s a general rule that the better a non-Chicago town, the more tried and true Chicago traits it possesses. Some of the basics include a halfway decent public-transportation system, amazing food, racial and linguistic diversity.

However, reading the truly excellent reporting of DI staffer Quentin Misiag on Monday, it seems that Johnson County — and the whole of Iowa for that matter — seems to be insistent on importing one of Chicago’s more dubious institutions: tax-increment financing, better known as TIF.

TIFs are a public-financing scheme in which property-tax values for a designated “TIF districts” are frozen for a set period time — in Iowa, it’s no longer than 20 years for “non-blighted” areas. The difference between the frozen rate and the “actual rate,” once values and taxes begin to inevitably rise, are put in a TIF fund, which is used to subsidy both private and public economic development in the district.

In theory, this seems like a good solution for the problem of slums, because private developers aren’t likely to put much-needed capital in poor communities without subsidies from the government. However, in practice in places such as Chicago, TIFs have shown themselves to be nothing less than a public-policy disasters.

For starters, TIFs are rarely used for the purpose they were designed for, revitalizing economically ravaged neighborhoods, instead being put to use subsidizing high-end real estate for the wealthy. In Chicago, under the administration of Mayor Rahm Emmanuel, TIFs are now being used in neighborhoods such as the South Loop and Old Town, which happen to be some of the richest neighborhoods in the city — not exactly places that private businesses would shy away from without the massive amounts of corporate welfare that constitute TIF subsidies.

Some of the more egregious projects for which these funds have been utilized include a $55 million  hotel and arena for the DePaul Blue Demons basketball team in the South Loop — which has about as much basketball talent as I do — and a nearly  $30 million skyscraper for River North, perhaps the gauziest of the über-wealthy Chicago neighborhoods/rich people playgrounds.

What makes the rampant use of TIF for what amounts to welfare for the wealthy go from obscene to pernicious is the dirty little detail of how TIF districts affect the rest of the city. You see, when the city collects TIF funds, they can only be used for the funding of TIF development projects.This leaves cash-strapped municipalities such as Chicago with two bad options: cut the services, or drastically raise property tax rates in non-TIF districts.

So, Chicago gets atrophied public services, higher tax rates, and slums that stay slums, while the city’s elite get new toys to play with, built and paid for by the city’s middle and lower classes.

This pattern seems to be repeating itself in Iowa. As Misiag pointed out in his piece, most of the recent TIF funding in Iowa City seems to be focused on funding construction downtown, a place that can described with many adjectives, “blighted” not being one of them. It’s even worse in Coralville, where, as The Daily Iowan reported in a story that wouldn’t be out of place in a Chicago newspaper, “51 percent of the city’s outstanding debt is tied up in the 180-acre Iowa River Landing development and the city-owned Marriott Hotel and Conference Center, city documents show. The notion of TIF districts throughout Coralville have been in place since 1996 and have pushed its property-tax base up by more than $836 million.”

TIFs represent Chicago at its worst. They are corrupt, wasteful, injurious, and both perpetuate and exacerbate existing divisions between rich and poor. They are a stain on a great city; they shouldn’t become a stain on its great neighbor.


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