lessons learned from lawndale-2011
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What is a TIF?
A TIF (Tax Increment Financing) district is anarea within a city that, after much careful studyby the city and expert consultants, is found to beblighted and without hope of attracting privateinvestment without some governmental
intervention.
Source: ABCs of Tax Increment Financing
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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
1) Source: City of Chicago website
Inadequate utilities Deleterious land use or
layout Lack of physical
maintenance Lack of community
planning
Dilapidation ordeterioration
TIF assistance for eligible projects usually exceeds $1 million.
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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, TIFsgenerate money for redevelopment by raising the valueof the property that is taxed. (raising the value ofthe 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 theterm "EAV," or "Equalized Assessed Value," to describeproperty value.) This is the "Base EAV.
Source: Cook County Clerk website
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How TIFs Work TIFs capture money by devoting all new property taxes
to redevelopment. That means that once a TIF isestablished, taxing bodies (the City of Chicago's generaltreasury, the Chicago Public Schools, the Chicago ParkDistrict, etc.) get no new revenue from the TIF. Theirshare of the property taxes is "frozen" at the level it wasat 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 taxeswere diverted when the TIF was created
Source: Cook County Clerk website
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How TIFs Work
Where does this new property value come from? It canhappen in one of three ways.1. New development on vacant land that, before the new project
was built, paid little or no taxes.2. Improvements to existing properties, such as an addition to a
house, a factory, or a store.3. Taxes on existing properties could go up, either because of
inflation (sometimes called "natural growth" in propertyvalues) or because of gentrification in the neighborhood.
In any of these cases, the new tax dollars go to the projectfund controlled by the TIF district, not to the City, theschools, or any other taxing body. Money can be transferredbetween TIFs, but only between adjacent TIFs.
Source: Cook County Clerk website
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Example
Step Description Amount
1. Base EAV The total value of all property in theTIF just before the TIF district wasestablished.
$10,000,000
2. Year One EAV The total property value of the TIF
one year after it was created.
$11,000,000
3. Growth in EAV The difference between the BaseEAV and the current EAV.
$1,000,000
4. Tax Rate The percentage of EAV (propertyvalue) that goes to taxes.
10%
5. Increment The growth in property valuemultiplied by the tax rate - i.e., thenew taxes that go to the TIF fund.
10%
Source: Cook County Clerk website
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Long Term Impact of TIFs
Source: Wikipedia
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Neighborhood Improvement Program TIFWorks Streamlined TIF Riverfront Improvement Fund Laboratory Facilities Fund
Source: City of Chicago website.
TIF Programs
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Ogden-Pulaski TIF
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Boundaries
Project Goals Community that is stable,
economically and racially diverse,secure and beautiful
Comprehensive housing programthat serves homeowners and
renters of all income groups
Revitalized commercial basehighlighted by Ogden Avenue asthe main corridor
Preservation and enhancement ofhistoric or architecturally
significant buildings in the ProjectArea
New investment and developmentopportunities
ParticularsSponsors/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
There are approximately 173 blocks133 blocks (77%) are in the 24th Ward40 blocks (23%) are in the 22nd Ward
Ogden-Pulaski TIF
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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 tocommercial/light manufacturing.
Up to 300 units of new housing (including affordablehousing units)
New job opportunities for local residents, includingwelfare to work programs and jobs for ex-offenders.
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Budget Major Projects
Actual SBIF 2010
Private Funding-$2,000,000
TIF Funding-$1,000,000
2011 Allocation-$333,333
Speculative
Lawndale Corridor InitiativeConcept, July, 2008
Projects outlined in February,2008, Gapers Block Interview
with Alderman Munoz CTA Bus Barn
Open Space
Senior Housing
Industrial Corridor
Funds Expended to Date2010 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%
Project Type Amount
Analysis, Administration, Studies, etc. $7,500,000Property Acquisition, Site Prep, etc. $10,000,000
Rehabilitation of Existing Buildings $35,000,000
Public Improvements $30,000,000
Relocation Expenses $5,000,000
Job Training/Welfare to Work $2,500,000
Day Care Services $6,000,000
Interest Subsidy $4,000,000
Total $100,000,000
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Example Site:West Ogden Avenue and S. Millard Street6-Story, Mixed Use Development
Residential Space80,720 SF30% Affordable
Commercial Space4,828 SF5 Small Retail Stores
Total Cost:$18.4 Million
Loss:$100,000
Residential Space68,000 SF20% Affordable
Commercial Space13,600 SF10 Small Retail Stores
Total Cost:$16.6 Million
Loss:
$340,000
Example Site:West Ogden Avenue and N. Millard Street5-Story, Mixed Use Development
Ogden-Pulaski TIFLawndale Corridor Development Initiative Project Concepts
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Example Site:
19th
Street and Pulaski3-5-Story, Mixed Use Development
ResidentialSpace95,000 SF20% Affordable
CommercialSpace8,160 SF6 Small RetailStores
Total Cost:$22.2 Million
Loss:$645,000
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13 Tips for TIF Advocacy
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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 issuesimpact 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?
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Tip #2: Know the Approval Processand the Rules of Engagement
Public CommunityMeeting
Introduction toCommunity
Development
Commission
Review by the JointReview Board
Public Hearing beforethe Community
DevelopmentCommission
Introduction to CityCouncil
Review by CityCouncil Finance
Committee
Approval by the FullCity Council
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Tip # 3: Know the Laws, Ordinances,Policies and Plans that Drive the TIF
State Code (Go to the State of Illinois GeneralAssembly website,www.ilga.gov/and search underTax Increment Financing to see what bills come up.)
City of Chicago Website (Go towww.cityofchicago.org and search under TIF, Cityland sales, freedom of information request,interested party)
TIF Redevelopment Plan Ordinances Ask Chicago Department of Planning and
Development to see copies of any plans referenced inthe TIF Redevelopment Plan ordinance
Housing Impact Study
http://www.ilga.gov/http://www.cityofchicago.org/http://www.cityofchicago.org/http://www.ilga.gov/ -
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Tip #4: Know What Questions to Ask
What are the goals and objectives for the TIF? Are these in conflict with thebest 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 communityto 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?
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Tip # 5: Analyze the RedevelopmentPlan 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, readto 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 mybusiness property or any of my membersbusiness properties be
taken over through eminent domain?
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Tip #6: Find Allies WhoShare Common Interests
Activists from other communities
Politically connected or neutral people who have theear 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
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Tip # 7: Know Your Rightsand Legal Standing
Is the TIF being carried out in a mannerconsistent with the local, state and federal laws?
Has the TIF somehow deprived homeowners ofany of their fundamental rights (property rights,
civil rights, etc.)? Has the TIF effectively discriminated against a
group of people?
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Tip #8: Understand the Ethics Behindthe Plan Are there potential conflicts of interest?
Is there adequate separation between the roles of planner, real estate developer, majorland 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 thatsponsor or support TIFs. How do they handle the competing interests of theelectorate and the community-based organization?
Is there potential for the plan to displace one group of people in favor ofanother?
Are advisory committees staffed through an open, nonpartisan political process?
Are the interests of low income taxpayers, who must ultimately pay for andreimburse 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?
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Tip #9: Know Where Your ElectedOfficials Stand on the Issues
Have meetings with Alderman, Cook CountyCommissioner, State Representative, StateSenator, Congressman, Senators
Host town hall meetings and other public
meetings Review voting records
Read articles in local press
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Tip #10: Keep Your ConstituencyInformed 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
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Tip # 11: Be Transparent inYour Communications
Integrity is Key
Utilize language of the City to the greatest extent possiblewhen describing official proceedings, even if you have tosimplify it for people who may not be familiar
Never distribute flyers that could be intentionally misleadingjust 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 youprovided the incorrect information, even if it meansretracting statements in the local newspapers, or re-sending
1,000s of e-mails and mailers.
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Tip # 12: Accept the Consequencesof 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
NegativeAttempts 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
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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 ofothers; receive constructive feedback and establish long termrelationships.
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Further Information
For further information regarding thispresentation, contact Valerie F. Leonard at
773-21-3137 [email protected]. This presentation has been archived at
http://lawndalealliance.blogspot.com. You may
visit this blog to review archived files from theLawndale Alliance.
mailto:[email protected]://lawndalealliance.blogspot.com/http://lawndalealliance.blogspot.com/mailto:[email protected]