Lessons Learned from Lawndale

13 Tips for Effective TIF Advocacy

Presented the Washington Park Community by Valerie F. Leonard of the Lawndale Alliance
Washington Park Advisory Council Washington Park Neighborhood Association Washington Park Concerned Residents Washington Park Neighborhood Association

What is a TIF?
A TIF (Tax Increment Financing) district is an area within a city that, after much careful study by the city and expert consultants, is found to be blighted and without hope of attracting private investment without some governmental intervention.

Source: ABCs of Tax Increment Financing

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 Inadequate utilities Deleterious land use or layout Lack of physical maintenance Lack of community planning Dilapidation or deterioration

TIF assistance for eligible projects usually exceeds $1 million. 1) Source: City of Chicago website

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, TIFs generate money for redevelopment by raising the value of the property that is taxed. (raising the value of the 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 the term "EAV," or "Equalized Assessed Value," to describe property value.) This is the "Base EAV.

Source: Cook County Clerk website

How TIFs Work

TIFs capture money by devoting all new property taxes to redevelopment. That means that once a TIF is established, taxing bodies (the City of Chicago's general treasury, the Chicago Public Schools, the Chicago Park District, etc.) get no new revenue from the TIF. Their share of the property taxes is "frozen" at the level it was at 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 taxes were diverted when the TIF was created
Source: Cook County Clerk website

How TIFs Work

Where does this new property value come from? It can happen in one of three ways.
1. 2. 3.

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

New development on vacant land that, before the new project was built, paid little or no taxes. Improvements to existing properties, such as an addition to a house, a factory, or a store. Taxes on existing properties could go up, either because of inflation (sometimes called "natural growth" in property values) or because of gentrification in the neighborhood.

Source: Cook County Clerk website

Here's an example:

Example
Step 1. Base EAV Description Amount The total value of all property in the $10,000,000 TIF just before the TIF district was established. The total property value of the TIF one year after it was created. The difference between the Base EAV and the current EAV. The percentage of EAV (property value) that goes to taxes. The growth in property value multiplied by the tax rate - i.e., the new taxes that go to the TIF fund. $11,000,000

2. Year One EAV

3. Growth in EAV

$1,000,000

4. Tax Rate

10%

5. Increment

10%

Source: Cook County Clerk website

Long Term Impact of TIFs

Source: Wikipedia

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

Source: City of Chicago website.

Ogden-Pulaski TIF

Ogden-Pulaski TIF
There are approximately 173 blocks
133 blocks (77%) are in the 24th Ward 40 blocks (23%) are in the 22nd Ward

Project Goals
Community that is stable, economically and racially diverse, secure and beautiful Comprehensive housing program that serves homeowners and renters of all income groups

Boundaries

Revitalized commercial base highlighted by Ogden Avenue as the main corridor

Particulars
Sponsors/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

Preservation and enhancement of historic or architecturally significant buildings in the Project Area New investment and development opportunities

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 to commercial/light manufacturing. Up to 300 units of new housing (including affordable housing units) New job opportunities for local residents, including welfare to work programs and jobs for ex-offenders.

Issues
The will of local property owners-- who collectively will pay over $250,000,000 in property taxes over the next 23 yearsseems to be ignored in favor of a handful of influential foundations and taxexempt organizations. Up to 1,200 persons could be potentially displaced as a result of the implementation of the proposed TIF. Likewise, 635 residential units (1,200 people) could be impacted by building code violations. There are a substantial number of errors in the acquisition plan and the list of homes potentially displaced by the TIF. The plan was not developed with broad based community input. There is no indication that the City Department of Planning and Development is willing to change the proposed redevelopment plan and budget to take into account the suggestions provided during the two public meetings they convened on the TIF. There are no mechanisms in place for community oversight for development in the Lawndale community. The Lawndale Community Conservation Council was dissolved several years ago. There is no TIF Advisory Council.

The plan calls for racial and economic diversity, but does not articulate how this would be achieved. This is of particular concern in a community that is currently 93% African, with a median income of $18,342.

 Budget
Project Type
Analysis, Administration, Studies, etc. Property Acquisition, Site Prep, etc. Rehabilitation of Existing Buildings Public Improvements Relocation Expenses Job Training/Welfare to Work Day Care Services

Major Projects
Amount
$7,500,000 $10,000,000 $35,000,000 $30,000,000 $5,000,000 $2,500,000 $6,000,000

Actual
SBIF 2010
Private Funding$2,000,000 TIF Funding-$1,000,000 2011 Allocation-$333,333
Speculative

Interest Subsidy
Total

$4,000,000
$100,000,000

Funds Expended to Date

2010 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%

Lawndale Corridor Initiative Concept, July, 2008 Projects outlined in February, 2008, Gapers Block Interview with Alderman Munoz CTA Bus Barn Open Space Senior Housing Industrial Corridor

Ogden-Pulaski TIF
Projected Revenues and Expenses
Item Incremental Property Tax Revenue (100% Collected) Incremental Property Tax Revenue (100% Collected) Incremental Property Tax Revenue (100% Collected) Unallocated Funds (Jan-11) Neighborhood Improvement Program Neighborhood Improvement Program Program Administration Program Administration Program Administration Street Resurfacing - Lawndale, Cermak to Ogden Green Alley - Grenshaw/ Roosevelt/ Keeler/ Kildare Reimbursement for TIF Eligibility Study Lighting - Cullerton, Pulaski to Keeler Street Resurfacing - Kevdale, 16th to 18th Lighting - Ridgeway Av., 16th to Ogden Lighting - Komensky, Roosevelt to 19th Small Business Improvement Fund Small Business Improvement Fund Small Business Improvement Fund Residential Lighting - Drake, Ogden to Cermak Alley Reconstruction - 13th St, Karlov, Kedvale, 14th St. Residential Lighting - Harding, 16th to Ogden Residential Lighting - Lawndale, 16th to Ogden Alley Construction - Cullerton, Kildare, 21st St, Kostner Projected Remaining Balance 2013 Year 2011 2012 2013 2011 2011 2012 2011 2012 2013 2011 2011 2011 2011 2011 2011 2011 2011 2012 2013 2011 2011 2011 2011 2011 Amount 2,736,900.00 2,736,900.00 3,531,500.00 3,755,053.00 (500,000.00) (500,000.00) (24,700.00) (25,200.00) (25,700.00) (49,040.00) (287,000.00) (100,000.00) (130,000.00) (48,904.00) (195,000.00) (390,000.00) (500,000.00) (250,000.00) (250,000.00) (100,000.00) (219,000.00) (260,000.00) (195,000.00) (295,000.00) 8,415,809.00

Ogden-Pulaski TIF
Lawndale Corridor Development Initiative Project Concepts
Example Site: West Ogden Avenue and S. Millard Street 6-Story, Mixed Use Development Example Site: West Ogden Avenue and N. Millard Street 5-Story, Mixed Use Development

Residential Space 80,720 SF 30% Affordable Total Cost: $18.4 Million Loss: $100,000

Commercial Space 4,828 SF 5 Small Retail Stores

Residential Space 68,000 SF 20% Affordable

Total Cost: $16.6 Million Loss: $340,000

Commercial Space 13,600 SF 10 Small Retail Stores

Example Site: 19th Street and Pulaski 3-5-Story, Mixed Use Development

Residential Space 95,000 SF 20% Affordable

Commercial Space 8,160 SF 6 Small Retail Stores

Total Cost: $22.2 Million Loss: $645,000

13 Tips for TIF Advocacy

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 issues impact 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?

Tip #2: Know the Approval Process and the Rules of Engagement
Public Community Meeting Introduction to Community Development Commission Review by the Joint Review Board

Public Hearing before the Community Development Commission

Introduction to City Council

Review by City Council Finance Committee

Approval by the Full City Council

Tip # 3: Know the Laws, Ordinances, Policies and Plans that Drive the TIF
State Code (Go to the State of Illinois General Assembly website, www.ilga.gov/and search under Tax Increment Financing to see what bills come up.) City of Chicago Website (Go to www.cityofchicago.org and search under TIF, City land sales, freedom of information request, interested party) TIF Redevelopment Plan Ordinances Housing Impact Study
Ask Chicago Department of Planning and Development to see copies of any plans referenced in the TIF Redevelopment Plan ordinance

Tip #4: Know What Questions to Ask

What are the goals and objectives for the TIF? Are these in conflict with the best 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 community to 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?

Tip # 5: Analyze the Redevelopment Plan 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, read to 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 my business property or any of my members business properties be taken over through eminent domain?

Tip #6: Find Allies Who Share Common Interests

Activists from other communities Politically connected or neutral people who have the ear 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

Tip # 7: Know Your Rights and Legal Standing

Is the TIF being carried out in a manner consistent with the local, state and federal laws? Has the TIF somehow deprived homeowners of any of their fundamental rights (property rights, civil rights, etc.)? Has the TIF effectively discriminated against a group of people?

Tip #8: Understand the Ethics Behind the Plan

Are there potential conflicts of interest?
Is there adequate separation between the roles of planner, real estate developer, major land 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 that sponsor or support TIFs. How do they handle the competing interests of the electorate and the community-based organization? Is there potential for the plan to displace one group of people in favor of another? Are advisory committees staffed through an open, nonpartisan political process? Are the interests of low income taxpayers, who must ultimately pay for and reimburse 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?

Tip #9: Know Where Your Elected Officials Stand on the Issues
Have meetings with Alderman, Cook County Commissioner, State Representative, State Senator, Congressman, Senators Host town hall meetings and other public meetings Review voting records Read articles in local press

Tip #10: Keep Your Constituency Informed 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

Tip # 11: Be Transparent in Your Communications

Integrity is Key
Utilize language of the City to the greatest extent possible when describing official proceedings, even if you have to simplify it for people who may not be familiar Never distribute flyers that could be intentionally misleading just 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 you provided the incorrect information, even if it means retracting statements in the local newspapers, or re-sending 1,000s of e-mails and mailers.

Tip # 12: Accept the Consequences of 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

Negative
Attempts 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

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 of others; receive constructive feedback and establish long term relationships.

Further Information
For further information regarding this presentation, contact Valerie F. Leonard at 773-21-3137 or valeriefleonard@msn.com. This presentation has been archived at http://lawndalealliance.blogspot.com. You may visit this blog to review archived files from the Lawndale Alliance.