Lessons Learned From Lawndale-2011

8/6/2019 Lessons Learned From Lawndale-2011

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What is a TIF?

A TIF (Tax Increment Financing) district is anarea within a city that, after much careful studyby the city and expert consultants, is found to beblighted and without hope of attracting privateinvestment without some governmental

intervention.

Source: ABCs of Tax Increment Financing


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TIF Eligibility Factors Under state law, areas proposed for TIF designation must

possess numerous blighting factors to be eligible:

-Age

-Obsolescence

-Code violations-Excessive vacancies-Overcrowding of

facilities-Lack of ventilation, light,

sanitary facilities-Excessive land coverage

1) Source: City of Chicago website

Inadequate utilities Deleterious land use or

layout Lack of physical

maintenance Lack of community

planning

Dilapidation ordeterioration

TIF assistance for eligible projects usually exceeds $1 million.


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How TIFs Work "Freezing" the Tax Base and Collecting

"Increment" TIFs are politically appealing tools because they do not

require the City to raise your tax rate. Instead, TIFsgenerate money for redevelopment by raising the valueof the property that is taxed. (raising the value ofthe base upon which we are taxed)

It works like this: When the TIF is established, the County looks at the

value of all the property in the TIF. (The County uses theterm "EAV," or "Equalized Assessed Value," to describeproperty value.) This is the "Base EAV.

Source: Cook County Clerk website


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How TIFs Work TIFs capture money by devoting all new property taxes

to redevelopment. That means that once a TIF isestablished, taxing bodies (the City of Chicago's generaltreasury, the Chicago Public Schools, the Chicago ParkDistrict, etc.) get no new revenue from the TIF. Theirshare of the property taxes is "frozen" at the level it wasat just before the TIF was approved.

The taxes on all the new property value in the TIF go into

the TIF fund and are reinvested in that area. Over time, the TIF gets more tax revenue than the

general funds of the taxing bodies from which the taxeswere diverted when the TIF was created



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How TIFs Work

Where does this new property value come from? It canhappen in one of three ways.1. New development on vacant land that, before the new project

was built, paid little or no taxes.2. Improvements to existing properties, such as an addition to a

house, a factory, or a store.3. Taxes on existing properties could go up, either because of

inflation (sometimes called "natural growth" in propertyvalues) or because of gentrification in the neighborhood.

In any of these cases, the new tax dollars go to the projectfund controlled by the TIF district, not to the City, theschools, or any other taxing body. Money can be transferredbetween TIFs, but only between adjacent TIFs.



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Example

Step Description Amount

1. Base EAV The total value of all property in theTIF just before the TIF district wasestablished.

$10,000,000

2. Year One EAV The total property value of the TIF

one year after it was created.

$11,000,000

3. Growth in EAV The difference between the BaseEAV and the current EAV.

$1,000,000

4. Tax Rate The percentage of EAV (propertyvalue) that goes to taxes.

10%

5. Increment The growth in property valuemultiplied by the tax rate - i.e., thenew taxes that go to the TIF fund.

10%



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Long Term Impact of TIFs

Source: Wikipedia


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Neighborhood Improvement Program TIFWorks Streamlined TIF Riverfront Improvement Fund Laboratory Facilities Fund

Source: City of Chicago website.

TIF Programs


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Ogden-Pulaski TIF


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Boundaries

Project Goals Community that is stable,

economically and racially diverse,secure and beautiful

Comprehensive housing programthat serves homeowners and

renters of all income groups

Revitalized commercial basehighlighted by Ogden Avenue asthe main corridor

Preservation and enhancement ofhistoric or architecturally

significant buildings in the ProjectArea

New investment and developmentopportunities

ParticularsSponsors/Developers-City of Chicago,LISC, Steans Family Foundation,LCDC

Consultant- Johnson Research Group

Wards-24,22

Date Created-4/9/08

Termination-4/9/33

Uses-Residential,Commercial

TIFWorks Eligible

There are approximately 173 blocks133 blocks (77%) are in the 24th Ward40 blocks (23%) are in the 22nd Ward

Ogden-Pulaski TIF


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Project Highlights Up to 20,000 square feet commercial development along

Ogden Avenue, Pulaski Avenue, 16th Street (combination

commercial and residential) Potential re-zoning of the area in the vicinity of Kedzie

Avenue and Cermak Road from residential tocommercial/light manufacturing.

Up to 300 units of new housing (including affordablehousing units)

New job opportunities for local residents, includingwelfare to work programs and jobs for ex-offenders.


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Budget Major Projects

Actual SBIF 2010

Private Funding-$2,000,000

TIF Funding-$1,000,000

2011 Allocation-$333,333

Speculative

Lawndale Corridor InitiativeConcept, July, 2008

Projects outlined in February,2008, Gapers Block Interview

with Alderman Munoz CTA Bus Barn

Open Space

Senior Housing

Industrial Corridor

Funds Expended to Date2010 Fund Balance-$3,860,030

% to TIF in 2010-21%% to General Fund in 2010-79%

Revenues Since Inception-$3,923,452

2010 Revenues-$2,354,679

2010 Expenditures-4$1,934

Beginning EAV- $216,455,015

2010 EAV- $289,789,402

% Growth in EAV- 33%

Project Type Amount

Analysis, Administration, Studies, etc. $7,500,000Property Acquisition, Site Prep, etc. $10,000,000

Rehabilitation of Existing Buildings $35,000,000

Public Improvements $30,000,000

Relocation Expenses $5,000,000

Job Training/Welfare to Work $2,500,000

Day Care Services $6,000,000

Interest Subsidy $4,000,000

Total $100,000,000


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Example Site:West Ogden Avenue and S. Millard Street6-Story, Mixed Use Development

Residential Space80,720 SF30% Affordable

Commercial Space4,828 SF5 Small Retail Stores

Total Cost:$18.4 Million

Loss:$100,000

Residential Space68,000 SF20% Affordable

Commercial Space13,600 SF10 Small Retail Stores


Loss:

$340,000

Example Site:West Ogden Avenue and N. Millard Street5-Story, Mixed Use Development

Ogden-Pulaski TIFLawndale Corridor Development Initiative Project Concepts


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Example Site:

19th

Street and Pulaski3-5-Story, Mixed Use Development

ResidentialSpace95,000 SF20% Affordable

CommercialSpace8,160 SF6 Small RetailStores


Loss:$645,000


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13 Tips for TIF Advocacy


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Tip #1: Know the Issues

What factors led to the creation of the TIF?

What are the current events in the community? How does the proposed plan address development issues?

How does the manner in which the plan addresses the issuesimpact the community as a whole? Me as an individual?

What do developers have to gain and how much?

What do tax payers have to lose? Are the benefits greater than the cost?

What is the proposed budget for the redevelopment plan?

How were local taxpayers involved in the creation in the plan?

If there are deficiencies in the plan, how can they be corrected?


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Tip #2: Know the Approval Processand the Rules of Engagement

Public CommunityMeeting

Introduction toCommunity

Development

Commission

Review by the JointReview Board

Public Hearing beforethe Community

DevelopmentCommission

Introduction to CityCouncil

Review by CityCouncil Finance

Committee

Approval by the FullCity Council


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Tip # 3: Know the Laws, Ordinances,Policies and Plans that Drive the TIF

State Code (Go to the State of Illinois GeneralAssembly website,www.ilga.gov/and search underTax Increment Financing to see what bills come up.)

City of Chicago Website (Go towww.cityofchicago.org and search under TIF, Cityland sales, freedom of information request,interested party)

TIF Redevelopment Plan Ordinances Ask Chicago Department of Planning and

Development to see copies of any plans referenced inthe TIF Redevelopment Plan ordinance

Housing Impact Study
http://www.ilga.gov/http://www.cityofchicago.org/http://www.cityofchicago.org/http://www.ilga.gov/


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Tip #4: Know What Questions to Ask

What are the goals and objectives for the TIF? Are these in conflict with thebest interests of the community?

How do we make sure developers are held accountable to the community?

How has this TIF and other TIFs in the community performed in the past?

Have other TIFs lived up to their expectations? How many people from the community have been hired? Do they still have

the jobs?

How do we improve the skill level of our workforce and business communityto take advantage of opportunities the TIF brings?

How many local minority-owned businesses have received TIF assistance? How many home owners and local residents have received TIF assistance?

What economic development plans are in place to supplement the TIF?

How have our schools and parks been impacted?


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Tip # 5: Analyze the RedevelopmentPlan from Your Own Vantage Point

If you are a resident, read to learn how your taxes may be impacted,or whats in it for you as a resident

Will my taxes go up? Will I or my neighbors be displaced? Will my property be taken through eminent domain?

If you are a business owner or leader of a chamber of commerce, readto learn how you or your members may be impacted Does the plan bring in other businesses that are competitive with mine or

my members? What incentives are offered to existing businesses? Will mybusiness property or any of my membersbusiness properties be

taken over through eminent domain?


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Tip #6: Find Allies WhoShare Common Interests

Activists from other communities

Politically connected or neutral people who have theear of those you need to influence Elected officials who are promoting issues and

ordinances that are consistent with your positions Research, policy and advocacy groups Local journalists and reporters Bloggers Community based organizations Engaged residents


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Tip # 7: Know Your Rightsand Legal Standing

Is the TIF being carried out in a mannerconsistent with the local, state and federal laws?

Has the TIF somehow deprived homeowners ofany of their fundamental rights (property rights,

civil rights, etc.)? Has the TIF effectively discriminated against a

group of people?


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Tip #8: Understand the Ethics Behindthe Plan Are there potential conflicts of interest?

Is there adequate separation between the roles of planner, real estate developer, majorland holder, real estate investor and the advisory group (if such a group exists)?

Is there a potential for divided loyalty?

In some cases, elected officials sit on boards of directors of organizations thatsponsor or support TIFs. How do they handle the competing interests of theelectorate and the community-based organization?

Is there potential for the plan to displace one group of people in favor ofanother?

Are advisory committees staffed through an open, nonpartisan political process?

Are the interests of low income taxpayers, who must ultimately pay for andreimburse all costs, adequately represented? What do they get out of the deal?

Do special interest groups have a greater voice than local residents?

Are there win-win strategies to minimize conflicts and even the playing field?


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Tip #9: Know Where Your ElectedOfficials Stand on the Issues

Have meetings with Alderman, Cook CountyCommissioner, State Representative, StateSenator, Congressman, Senators

Host town hall meetings and other public

meetings Review voting records

Read articles in local press


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Tip #10: Keep Your ConstituencyInformed of the Latest Developments

Telephone

Door to Door Canvassing/Flyering

CAN-TV

Community Newspaper Ads and Articles

Local and National Newspapers

Radio

Websites

Blogs

Newsletters

Direct Mail

E-Mail


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Tip # 11: Be Transparent inYour Communications

Integrity is Key

Utilize language of the City to the greatest extent possiblewhen describing official proceedings, even if you have tosimplify it for people who may not be familiar

Never distribute flyers that could be intentionally misleadingjust to generate a crowd. The truth is more than sufficient to

generate interest If you send out materials with errors of fact, correct the

mistake immediately, through the same channels youprovided the incorrect information, even if it meansretracting statements in the local newspapers, or re-sending

1,000s of e-mails and mailers.


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Tip # 12: Accept the Consequencesof Your Actions

Speaking Truth to Power has consequences

Positive Effect changes to systems that result in win-win solutions Heightened awareness of the issues More engaged community

NegativeAttempts to discredit groups and their messages advocating

change Leaders are often isolated and labeled as trouble makers Exclusion from key meetings by community gatekeepers Key stakeholders begin to distance themselves Retaliation


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Tip #13: Document Your Work Note changes in systems, policies, increased learning Keep copies of meeting notices, sign in sheets, meeting

notes Post as much documentation on websites and blogs as

possible Focusing on past successes serves as encouragement when

chips are down Communicating success maintains momentum

Documentation of progress attracts others to your process Documenting mistakes helps you keep from repeating them Sharing lessons learned with others provides an excellent

opportunity to promote your agenda, increase capacity ofothers; receive constructive feedback and establish long termrelationships.


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Further Information

For further information regarding thispresentation, contact Valerie F. Leonard at

773-21-3137 [email protected]. This presentation has been archived at

http://lawndalealliance.blogspot.com. You may

visit this blog to review archived files from theLawndale Alliance.
mailto:[email protected]://lawndalealliance.blogspot.com/http://lawndalealliance.blogspot.com/mailto:[email protected]

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Lessons Learned From Lawndale-2011

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