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This week, the City Council will vote on Mayor Brandon Johnson’s proposal to borrow $1.25 billion for affordable housing and other development, allowing many of the city’s tax increment financing districts to expire and ostensibly use that money to pay back the debt. As with any loan, the debt will accrue interest and bring the city’s total obligation to a whopping $2.4 billion to be repaid by 2061.
I share the mayor’s commitment and urgency to invest in Chicago, particularly as it relates to revitalizing downtown as a multiuse district and in communities historically left behind on the South and West sides.
The merits of his proposal are noble and necessary. However, there are too many unknowns — notably, a lack of specificity on the projects — and a tenuous track record on trust to approve the measure as currently drafted.
A pilot program is more prudent, so we can test the proposal’s assumptions and ensure we are proceeding in the most efficient way possible before putting several generations of taxpayers on the hook.
The current proposal upends the decades-old TIF system to incentivize development and bets big on several questions to which we have no guaranteed answers.
First, the ordinance’s revenue estimates assume that property assessments from the TIFs will remain flat over time. One of the largest TIFs — LaSalle Central — is composed almost entirely of office and commercial property, where values have fluctuated dramatically. According to the Building Owners and Managers Association of Chicago, three of the largest office buildings that changed hands last year sold at losses ranging from 50% to 90%. Assuming these properties will stay at the same assessed value moving forward is not realistic.
Second, in the past the city has used TIF surplus to plug budget holes. In the 2024 budget, this amounted to $434 million of TIF surplus to fill the gap. Issuing a bond of this staggering size would essentially eliminate the city’s ability to do this during future budget shortfalls unless we raise property taxes or explore other regressive revenue streams for which few people have an appetite.
Third, it’s unclear what effect this proposal would have on our bond ratings. Currently, the TIFs are set to expire, and the revenue would go back to government agencies to pay for operations or debt. Derailing that process and adding another billion dollars of debt won’t likely be viewed favorably by ratings agencies. Under Gov. J.B. Pritzker and Mayor Lori Lightfoot, we made improvements in this area, though already under Johnson, S&P lowered Chicago’s outlook on general obligation bonds.
Even if additional experts allayed these three financial concerns, there remains a deficit of trust we need to restore before making a billion-dollar bet.
Most recently, voters rejected the administration’s “first we get the money” mentality when Bring Chicago Home was defeated at the ballot box. We should take heed of what happened and, going forward, always put a clear plan in place before we dare ask taxpayers for their faith or credit.
There is a similar lack of trust between the mayor’s office and City Council, a relationship defined more by controversy than collaboration.
One year ago, Mayor Johnson told the Better Government Association that he would “reset the relationship between council and the mayor’s office, regain their collective trust, and work collaboratively and respectfully with alderpersons.”
Instead, we’ve had a troubling pattern of the mayor’s office acting unilaterally and the City Council having to live with it or clean it up on the back end, including:
- A handshake deal to renew the NASCAR race without consulting aldermen who had collected constituent feedback.
- The costly cancellation of a shelter site in Brighton Park after failing to coordinate with state officials on environmental safety risks.
- Signing a no-bid, nonunion contract to build winterized tents with GardaWorld.
- Extending a contract with Favorite Staffing despite serious health and service incidents.
- Announcing $95 million in 2023 spending on Dec. 29 after the money had already been spent.
- Ending the ShotSpotter contract before it was renewed following objections from the City Council and the police superintendent.
- The mayor’s recent request for an additional $70 million to fund the migrant crisis after he denied having already promised the money in a deal with the governor and County Board president.
City Council members are elected to be responsible stewards of taxpayer dollars, and as vice chair of the finance committee it’s particularly frustrating when we’re not given the opportunity to fulfill that duty. That’s why I introduced an ordinance to require transparency and authorization before spending in excess of a million dollars in federal funds. A diverse coalition and majority of my colleagues supported my initiative to prevent the mayor from using a $400 million piggy bank of taxpayer dollars without oversight — except the mayor’s office, which put a brick on my ordinance.
It’s important that we get this bond ordinance right because we need to invest in Chicago — but we need to collaborate and deliver results without significant adverse financial consequences. Proponents of the ordinance point to TIF districts expiring, which will help pay off the new bond. I agree, though we should scale this appropriately. Therefore, I am proposing a smaller initial authorization limited to three years, which reflects the remainder of the mayor’s and City Council’s current term.
Given our city’s fragile fiscal health and a shaky first year on the fifth floor, we should prove we can walk before we sprint toward a billion-dollar debt. Let’s right-size the ordinance by starting with a pilot program and then build upon our success — together.
Bill Conway is alderman of the 34th Ward.
Submit a letter, of no more than 400 words, to the editor here or email letters@chicagotribune.com.
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Bill Conway , 2024-04-15 19:44:50
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