Chicago Mayor Brandon Johnson suggested borrowing more than $1 billion to fund affordable housing and other economic initiatives.
Shifting away from the city’s current funding methods, the proposal allows for dozens of tax increment financing districts to expire with the goal that revenue will increase the city’s funds. TIFs currently give developers breaks in their property taxes and previously played an important role in Chicago’s economic development since their implementation more than three decades ago. In 2022, TIF districts took in $1.3 billion dollars in revenue.
Despite looming pension debt and City Hall’s ineffectiveness in collecting debt, some aldermen see this plan as the perfect opportunity to do away with TIFs.
“There was always going to come a time where we were going to have to think past TIF, and in a way, I’m grateful that this mass expiration of TIFs is kind of forcing our hand,” 1st Ward Alderman Daniel La Spata told Crain’s Chicago Business.
Lissette Castaneda, who is expected to be confirmed as the city’s housing commissioner, told Chicago’s WBEZ the Johnson administration is hopeful about passing the plan by the end of March.
The plan hinges on compromising with city aldermen about which TIF districts should expire and which should remain in place, as well as which projects and wards will be prioritized should the plan go into effect.
Alderman Andre Vasquez of the 40th Ward remains wary about the logistics of the plan.
“How does one determine which projects are being supported where they’re at?” Vasquez said. “Because there is a very real concern that you’re gonna have 50 alders all saying, ‘Well, I should be at the top of the list.’ And how is that figured out in a way that is a fair process?”
According to Crain’s Chicago Business, the borrowing plan would allocate $250 million per year for five years to the city’s overall funds rather than individual districts. The city estimates that by letting TIF districts expire, there would be an additional $2.2 billion in tax revenue being brought back into the city over the course of 15 years.
The freshman mayor has previously faced criticism for his handling of the city’s budget.
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According to a report by Illinois Policy, Chicago has the second-highest debt per taxpayer in the U.S. Chicago also has the highest amount of unfunded pension benefits totaling more than $33.7 million. Under Johnson’s proposed plan, the city plans to use the money from the expiring TIFs to pay back the accumulated $2.4 billion debt by 2061.
In December, Johnson came under fire for allocating $95 million in federal COVID-19 relief funds toward the migrant crisis. According to city, county, and state officials, nearly $321 million is needed through the end of the year to address the issue. Gov. J.B. Pritzker (D-IL) accused Johnson of not following through on his commitment to cover $70 million of the burden. State and county officials agreed to cover the remaining $250 million.
