In Chicago: Tight Funds for Public Schools; Tax Deals for Biz Allies

Thursday, August 9, 2012
"Rahm sends millions in TIF money to Penny -- not to schools"
(TIF means Tax Increment Financing. (Wikipedia article;
Other articles or sites: "TIF Subsidies Given to Chicago Companies, Nonprofits Bypass City Neighborhoods in Need of Jobs", "Report: TIF Funds Aren’t Helping Schools", "TIF Money For Chicago Public Schools: Like TIFs in Miniature".)
Mike Klonsky writes in his blog:

I'm still on the road but trying to keep up on Chicago happenings. Stunned but not surprised to see that Rahm is delivering millions from his TIF slush fund to his billionaire pal Penny Pritzker for her new Hyatt Hotel.
Pritzker sits on the mayor's hand-picked school board. [Chicago Public Schools] She's also [President Barack] Obama's chief campaign fundraiser. Pritzker is also an anti-union hard-liner who's trying to bust the union at Hyatt. She's claiming that there's no money left in the budget for even small teacher raises. The union argues that TIF money can be used to help solve the crisis. But Rahm obviously has his own priorities. Pritzker obviously has a conflict of interests.
“This one example shows the fundamental corruption in the way things are done here,” said David Orlikoff of the Chicago Teachers Solidarity Campaign, a labor and community coalition growing out of Occupy Chicago’s labor committee and supporting the Chicago Teachers Union.
“Then they tell teachers they don’t have any money for anything, except the mayor’s pet projects. It’s a conflict of interest – and it will be a conflict until the school board is elected.

Link to blog on Pritzker and TIF:
Curtis Black, at Community Media Workshop, August 8, 2012, "Penny Pritzker's TIF":

School board member Penny Pritzker’s Hyatt Hotels Corp. is benefiting from a $5.2 million TIF subsidy on 53rd Street – while CPS’s proposed 2013 budget cuts seven schools surrounding the hotel project by $3.4 million, which is roughly the portion CPS is losing from the TIF deal.
“This one example shows the fundamental corruption in the way things are done here,” said David Orlikoff of the Chicago Teachers Solidarity Campaign, a labor and community coalition growing out of Occupy Chicago’s labor committee and supporting the Chicago Teachers Union.
CTSC will hold a press conference and speakout and picket the project at 53rd and Harper on Wednesday, August 8, starting at 5:30 p.m.
“As a member of the Board of Education, it’s Penny Pritzker’s job to find money for our schools, not to take our money for her business,” Orlikoff said.
The $5.2 million subsidy is part of $20.4 million in TIF funds going to the University of Chicago-led redevelopment of Harper Court (see here for some background). In addition to the hotel, the university is building a 12-story office building in the first phase of the project.
CTSC points out that Pritzker has a net worth of $1.8 billion, and the University of Chicago – now engaged in a huge campus expansion – has an endowment of $6.6 billion.
“They have plenty of money,” said Lorraine Chavez of CTSC. “They don’t need a taxpayer subsidy to pay for it. It’s outrageous.”
At Catalyst, Penny Pritzker clarifies that she’s not personally receiving the $5.2 million, and in a statement to Newstips, Hyatt points out that the Hyde Park Hyatt will not be owned by the corporation but, like many Hyatts, operated under a franchise agreement, thus “neither Hyatt Hotels Corporation nor Penny Pritzker…is receiving TIF funds as a result of this project.”
Conflict of interest
“The school board should be defending school funding when the mayor wants to take it for TIFs; it’s the only body in a position to do that,” Orlikoff said. “But they’re appointed by the mayor, and they look the other way.
“Then they tell teachers they don’t have any money for anything, except the mayor’s pet projects. It’s a conflict of interest – and it will be a conflict until the school board is elected.
“We need representation on the school board, and we need to end the chronic underfunding of our schools,” Orlikoff said.
CTSC, which exists “to support teachers and fight for equitable quality education,” calls for increasing school funding “by reclaiming TIFs and taxing the rich.”
TIF is “a failed program,” Orlikoff said. “It’s not fighting economic blight, it’s a way of taking from everyone and giving to the One Percent.”
Questions on 53rd Street
There are lots of questions right now about the 53rd Street TIF, especially with a new TIF district now being carved out of it by a second developer.
Antheus Capital, planning an upscale residential and retail development at 51st and Lake Park, wants to break its parcel out of the 53rd Street TIF to form its own TIF district – in order apply for $10 million or more in TIF funds. The 53rd Street TIF advisory council has okayed the proposal.
But after ten years of operation, the 53rd Street TIF fund has a balance of just $3.7 million.
Now, with thirteen years to go, it’s on the hook for a $20-million subsidy, while revenues are slowing (due not just to a lousy economy but to the County Assessor’s new formula, which shifts the property tax burden from commercial to residential taxpayers) – and the TIF district is getting smaller.
“Many of us don’t expect to seek Phase 2″ ( a 26-story condo tower and four apartment buildings, estimated to cost $100 million), said longtime community activist George Rumsey. “It’s hard to see where the money’s going to come from . Everyone is wondering if there’s going to be enough to finish the first phase.”
“For two years I’ve been asking who is liable if the TIF funds come up short,” he said Rumsey. “I have not gotten an answer.”
Fourth Ward Ald. Will Burns has backed Hyatt’s TIF subsidy, telling the Sun Times it’s “absolutely essential,” though the Ramada Lakeshore hotel is located a few blocks away.
Time to ‘revisit’ TIF?
The Hyde Park Herald called for “revisiting” the 53rd Street TIF in an editorial last week. It points out that the TIF district was sold to residents in 2001 on the basis of promised community benefits, including a new addition for Canter Middle School and a parking lot, none of which have materialized.

For conclusion of Community Media Workshop story click to here.

Here's a map of TIF projects in Chicago.

PURE reports that TIF money is going to build another Hyatt hotel (hello, Hyatt mogul and CPS board member, Penny Pritzker), but it says that TIF money should instead go to public schools.
"PSAT for 8-7-12: Boycott Hyatt for public education"