OFFICE
OF
THEINSPECTOR
GENERAL
City
of
Chicago
180
N.
MichiganAvenue,
Suite
2000
Chicago,Illinois
60601
Telephone:(773)
478-7799
Fax:
(773)
478-3949
To:
Mayor
Richard
M.
Daley
Members
of
the
City
Council
From:
InspectorGeneralJosephFerguson
\
Re:
CentralLoopand
Central
West
TIF
Audit
Date:
June
29,2010
The
Inspector
General’s
Officehas
completed
anaudit
of
processes
and
procedures
related
to
Tax
Increment
Financing
(TIF)
expenditures
between
January
1,
2003
and
December
31,
2007fortheCentralLoopand
Central
West
TIF
districts.
Additionally,
we
reviewed
TIF
district
portingand
transfers
for
theyears
1997
through
2007.
Asyou
know,
theCity
of
Chicagouses
TIF
as
an
economicdevelopment
tool
to
promote
privateredevelopment
of
commercial,industrial,and
residential
sites
throughout
theCity.
A
core
purpose
of
TIF
is
to
supportpublic
projects
and
incentivizeprivatedevelopment
in
economicallydepressed
areaswhichhave
difficulty
attractingdevelopment
investment.
It
does
so
through
a
23-year
setaside
of
propertytax
revenuesabove
a
specified
base.
Portions
of
the
resultingspecified
future
taxrevenue
streammay
then
be
collateralized
for
majordevelopmentprojectfinancing
andalsoused
for
direct
governmental
support
to
broaden
and
deepen
thearea’s
economicandinfrastructure
basecritical
to
robustand
sustainable
redevelopment
in
a
community.
Amongotherthings,
TIF
is
commonlyused
to
finance
public
and
privateventures
such
as
buildingrehabilitation,construction
of
affordablehousing,
development
of
public
parks,schools,
infrastructure
improvements,
as
well
as
job-training
andday
care
programs.
Our
purpose
was
to
test
and
evaluateactivities
performed
to
ensureeffective
and
efficient
operations,
compliancewithpolicies
and
procedures,and
to
evaluate
the
effectiveness
of
controls
related
to
the
payment
of
expenditures
using
TIF
funds.Acopy
of
the
auditreport
is
attached.Inoverview,the
audit
found
that
internal
controlswere
not
adequate
to
ensureeffective
management
of
theTIF
expenditures
we
reviewed,
as
related
to
theState
of
Illinois
TIFAct,
65
ILCS
5/11-74.4etseq.(“TheTIFAct”).
Additionally,
we
conclude
that
TIF—related
processes
are
not
sufficiently
transparent.
More
specifically,
the
audit
found,
amongother
things,that
as
a
result
of
the
inadequacy
of
certain
internal
controls:Excessand
unused
TIF
funds
from
the
CentralLoop
TIF
district
for
Millennium
ParkandtheHarold
Washington
College
Rehabilitation
project,totaling
approximately
$1.2
million,
wereleft
Joseph
M.
Ferguson
Inspector
General
Website:www.chicaaoinsDectoraeneral
.ora
Hotline:
866-IG-TIPLINE
(866-448-4754)
audit.
In
otherrespects,
there
was
disagreement
regarding
our
conclusions
and
recommendationsrespectingcertain
of
thefindings.
TheCity’s
responses
are
included
in
ourfinal
report.Statedareas
of
disagreement
should
be
viewed
principally
as
reflective
of
a
constructive
dialogueacrossand
between
governmental
components
working
toward
the
sharedobjective
of
providing
effective,
efficientservices
in
a
mannerthat
complies
with
stateandlocallaw,and
is
transparent
and
accountable
tothe
residents
of
the
City.
cc:
Chief
of
StaffRaymond
Orozco
City
Comptroller
Steven
J.
Lux
Budget
DirectorEugene
Munin
CorporationCounsel
Mara
Georges
Chief
Procurement
Officer
Jamie
Rhee
Commissioner
Judy
Martinez,
Department
of
GeneralServices
CommissionerChristine
Raguso,Department
of
CommunityDevelopment
Commissioner
Lois
Weisberg,
Department
of
Cultural
Affairs
Superintendent
Jody
P.
Weis,
ChicagoPolice
Department
Director
of
Intergovernmental
AffairsJoan
Coogan
Executive
DirectorErin
Lavin
Carbonargi,Public
Building
Commission
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