Grassroots groups file suit against Chicago TIFs

Lincoln Yards TIF is Exhibit A as ‘a complete misuse of the program,’ suit charges

Amisha Patel, executive director of the Grassroots Collaborative, discusses the suit filed Wednesday against Chicago’s TIF program at the Daley Center. (One Illinois/Ted Cox)

By Ted Cox

Grassroots community groups filed suit against Chicago Wednesday charging that the city’s Tax Increment Finance program violates the state statute on TIFs and the Illinois Civil Rights Act by worsening segregation and racial inequity.

The suit, filed in Cook County Circuit Court by the Grassroots Collaborative and Raise Your Hand for Illinois Public Education, is a “challenge to the Chicago TIF system,” said Aneel Chablani, an attorney with the Chicago Lawyers’ Committee for Civil Rights, which is representing the groups. It cites the recently approved Cortland/Chicago River TIF district, which is projected to provide $1.3 billion to the Lincoln Yards development.

At a news conference Wednesday at the Daley Center, where the suit was filed, Amisha Patel, executive director of the Grassroots Collaborative, charged that the city’s TIF districts are primarily located in the “wealthiest, whitest, most economically vibrant neighborhoods” and that they “lap up dollars and hand them to private developers.”

The planned 55-acre development, located in a former manufacturing district between the well-to-do lakefront Lincoln Park neighborhood and booming Wicker Park, is “in clear violation of TIF statutes,” Patel said, and “a complete misuse of the program.”

According to Patel, it violates language in state law that calls for “TIF districts to be in blighted neighborhoods.”

TIFs are considered a tool for neighborhood development. They basically freeze property taxes in a designated area for up to 23 years, and as the area appreciates in value the additional property taxes raised are placed in a TIF fund to be used on infrastructure and other improvements in the area. Meanwhile, other taxpayers have to make up the revenue lost to those funds.

That’s exactly what the Lincoln Yards TIF is intended to do, but the suit argues that TIFs are specifically designated for “blighted” neighborhoods.

“The Lincoln Yards area does not meet the statutory requirements for blight and is not the type of area that qualifies as one intended for the use of public taxpayer funds,” Chablani said. “This is an area that, on its own, will see vast economic development” and is in no need of “vast public subsidies.”

Calling it a “rampant abuse of the TIF system,” Chablani said the suit intends to repeal creation of the Lincoln Yards TIF, enjoin any use of TIF funds on the development, and reform Chicago’s entire TIF program to bring it in line with state law. He added that he believes it’s the first suit of its kind filed against the city’s TIF program.

Former Cook County Clerk David Orr reported last year that $1 billion was collected in TIF funds for the 2017 tax year, $660 million of that in Chicago. Chicago Mayor Rahm Emanuel originally ran for office in 2011 claiming he’d rein in TIFs, and he actually reduced their use in his first term, but TIFs have accelerated since he won re-election in 2015.

Although many smaller communities praise TIFs as a valid development tool, the suit has statewide ramifications on where TIFs might legally be declared.

Joy Clendenning of Raise Your Hand, which started in Chicago and in recent years carried its mission to defend public education statewide, said TIFs “hurt our schools and our children by picking off funds which should go to our public entities.”

She called the Lincoln Yards TIF “a flagrant misuse of the TIF system,” but “just the latest in a long history of rampant abuses.”

“The fact that the city has been doing this for many years is exactly why we’re taking this action today,” Patel said. “This is the moment when we have to fight.”

Calling Chicago’s TIF program “racially and ethnically discriminatory,” Clendenning pointed out they’re primarily used in “majority white census tracts to the detriment of areas with majority African-American and Hispanic census tracts.”

The Rev. Marshall Hatch of New Mount Pilgrim Missionary Baptist Church said any TIFs in his West Garfield Park neighborhood are ineffective, with few building permits issued and no construction cranes in sight. He called Chicago’s use of TIFs “the same old, same old tale of two cities,” meaning a divide in civic resources devoted to rich and poor.

Chablani said the suit specifically addresses “the issue of fairness and equity in the Chicago TIF system” and cites violations of the Illinois Civil Rights Act as well, as most Chicago TIFs are located in “predominantly white, wealthier areas of the city” and only exacerbate “existing patterns of wealth and racial segregation.”

Patel added, “The fact that the TIF system was meant to address blight and is not only failing to do that but is worsening conditions for black and brown people is a fact that must change.”

The Emanuel administration said it had not yet seen the suit and declined comment. City lawyers figure to immediately try to quash the suit, but otherwise it will be left to Mayor-elect Lori Lightfoot to defend it after she takes office May 20. Lightfoot argued for a pause in deliberating the Lincoln Yards TIF during her campaign, but dropped her opposition after winning some 11th-hour concessions on minority- and women-owned businesses to be included in the development.

Lightfoot’s transition press office did not respond to a request for comment on whether her administration will aggressively defend against the suit.

“We hope that she won’t,” Patel said. “I’m very hopeful that Mayor Lightfoot will choose to use city resources to stop TIF abuses in the program and not use them to fight us.”