Tiff regarding Proposed “Rental Improvement Fund”
Today I received an email from Alderman Moore, and a brochure written by Brian White, Executive Director of Lakeside CDC, promoting Friday’s landlord’s meeting where they will present a proposed “Rental Improvement Fund” whereby local landlords within most of the 49th Ward would be entitled to grant money to repair their buildings, in exchange for the landlord committing to keep a certain number of units within the building affordable.
As attractive and beneficial as this proposal might sound, I am surprised that neither chose to disclose one vital piece of information regarding this proposal.
Where is the money coming from?
What neither the Alderman nor Brian disclosed was that the proceeds that would fund these grants would come from a TIF (tax increment financing) that the Alderman proposes the City create for nearly the entire 49th ward.
What does this mean?
Well, for the 23 years following establishment of the TIF, all revenue generated through property tax increases over and beyond the assessed value at the commencement of the TIF would go directly into a fund, where it could only be used for the specific purpose of the fund, which in this case is towards preserving and enhancing rental property. For example, if the TIF were to commence on 1/1/11, all properties within the ward wide TIF district would continue to pay property taxes to the County, City and schools only up to the property’s assessed value through 12/31/10; any additional revenue based on assessed valuation exceeding the 1/1/11 value, for the next 23 years, would fund the TIF, and be restricted to this particular rental improvement fund.
As former president of the Rogers Park Builders Group, and as a person who makes a living owning and managing rental properties, I certainly understand the stresses and challenges that landlords face, particularly in the older vintage buildings that exist in Rogers Park. Towards this end, I respect the desire by the Alderman, Lakeside and the other participants within the organization spearheading this initiative (North Side POWER), to address landlord needs, and to preserve a pool of affordable housing.
But, this idea comes at far too great of a cost and establishing a ward wide TIF, a horrible precedent that could forever doom this city, especially when other alderman suddenly desire ward wide TIFS of their own.
My opposition comes from my concern that the City is sponsoring far too many TIFS - thus depleting the County, the City, the Board of Education, and other governmental bodies from money that it desperately needs to fund County, City and educational requirements for the next generation.
These governmental bodies need revenue to meet their obligations (let alone pay off old obligations - did anyone say “pensions?”) - freeze them out of revenue generated through property tax increases, and these governmental bodies will have to raise this money through alternative means: be it fines, fees, increased tax rates applying to non TIF’d assets, selling or leasing other City assets, or compromising moral values via additional gambling venues. Along the way, as government obligations go unmet, see the City’s bond rating deteriorate, services get cut. Try to convince a large employer to locate here? Forget it.
Though it is early in the process, I urge the Alderman and Lakeside to not hide what it is that they are proposing.
The Alderman’s email, today, saying: “an innovative proposal to establish a"Rogers Park Rental Improvement Fund” that would provide landlords with grants of up to $10,000 per unit to improve their property, provided the owners agree to maintain rents at an affordable level” sure sounds great. But why not also mention - in flyers and emails promoting public discussion - that this is a TIF?
For the sake of having a meaningful discussion, don’t avoid calling this what it is - a TIF - a form of creative financing that historically, in isolated instances, has done some good, particularly in areas experiencing blight, where “but for” the TIF, no increased valuation would occur. In most instances, however, ill thought out and unnecessary TIFs, most poorly managed with little genuine accountability built in, have helped contribute mightily to the budgetary mess that the city, county and local schools now face.
The community really ought to know what this proposal is all about up front. I know that the Alderman wants to offer the community a chance to debate this idea. I simply respectfully suggest that in promotional flyers and emails that the Alderman and others be frank and up front about what it is that you are proposing.
Our tax money funds these grants. Let us know that important fact.
We can avoid a tiff on that!
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