The Equity Factor

Chicago School-Building Programs Eating Up the City’s TIF Money

The Chicago Tribune this weekend ran a deeply reported package on the city’s bond debts, exploring everything from egregious spending to Mayor Rahm Emanuel’s penchant for continually kicking the can down the road. A report from three Tribune writers raised serious questions about former Mayor Richard Daley’s building programs for schools on the South and West sides, which has resulted in $506 million in debt spread over 12 tax increment financing districts.

Rather than use TIF money for initiatives like job training programs and street repairs — its intended purpose — the funds were sunk into school construction. Typically, school construction and improvements are financed through bonds issued by the Chicago Public Schools (CPS) so the debt is shared equally across the entire city. “Last year the South Shore TIF district spent just $444,000 on economic initiatives and $1.7 million on debt payments related to school bonds,” the Tribune reported.

The $506 million is spread across mostly low-income neighborhoods, leaving renewal and job training programs, which could help spur some mobility, low on funds. Experts have questioned the legality of such spending, one of which told the Tribune that this use of TIF funding “doesn’t pass the smell test.”

Leading up to the 2006 election, when he won for his sixth and final term, Daley announced a $1 billion program to build 24 schools and renovate three. “To kick-start the Modern Schools Across Chicago project, he had the city — not CPS — issue a half-billion dollars in general obligation bonds,” the Tribune wrote.

TIF funds are still making payments for the Modern Schools program, with $200 million already covered by tax revenues in the aforementioned districts. Officials have, no surprise here, defended the spending, saying it falls under the umbrella of redevelopment.

This raises a larger question about mayors — who today can possess immense power — doing, essentially, whatever the hell they want with funds. Which is not to say we’re against school construction or improvements. But TIF funds and public school funds exist on separate ledgers for a reason. While repairs on schools certainly can promote more mobility through graduation rates and job skills programs, that money should come from the CPS.

Now, because of a manipulation of TIF funding, necessary improvements at the neighborhood level are on the back burner. Meanwhile only 12 districts foot the bill for school construction, a burden the entire city should share.

The Equity Factor is made possible with the support of the Surdna Foundation.

Bill Bradley is based in Brooklyn. His writing has appeared in The Daily, Bloomberg Businessweek, GQ.com and Vanity Fair, among others. Follow him on Twitter @billbradley3.

Tags: economic development, equity factor, chicago, rahm emanuel, schools, tax increment financing, job training, richard m. daley