Aldermen spent well over an hour grilling Managing Deputy Commissioner of the Department of Planning and Development, Aarti Kotak, on Mayor Emanuel’s ordinance regarding TIF surplus funds. Pushback and questioning led Chairman Ed Burke to hold the ordinance in committee.
Aldermen in attendance (committee members in bold): Chairman Ed Burke(14), Joe Moreno (1), Brian Hopkins (2), Pat Dowell (3), Leslie Hairston (5) Roderick Sawyer (6), Gregory Mitchell (7), Michelle Harris (8), Anthony Beale(9), Patrick Daley Thompson (11), George Cardenas (12), Marty Quinn (13), Raymond Lopez (15), Toni Foulkes (16), David Moore (17), Willie Cochran (20), Ricardo Munoz (22), Michael Zalewski (23), Danny Solis (25) Jason Ervin (29), Ariel Reboyras (30), Gilbert Villegas (36), Nick Sposato (38), Tom Tunney (44), John Arena (45), Harry Osterman (48), Joe Moore (49), Deb Silverstein (50)
Start Time: 11:26
Kotak explained the ordinance is a codification of a November 2013 executive orderfrom Mayor Emanuel that formalized the practice of annually identifying a portion of TIF funds designated for anticipated future use, removing that portion from that designation, and declaring that portion a surplus.
“This was done in recognition of the balance needed among all interests within the city. It created an increase in property tax revenue available to fund non-TIF related city needs, as well as our schools, parks, and other public institutions,” Kotak said, reminding aldermen that this is how the city has been operating for nearly two years.
In order to be eligible, a TIF fund must be 3 years or older and have a balance of at least $1M. The TIF can’t have been created for a single redevelopment project, the equalized assessed value of the property in the TIF area must be greater than it was when the TIF was designated, and it hasn’t transferred and is not scheduled to transfer funds to one or more contiguous TIF areas to pay debt service on the City’s Modern Schools Across Chicago bonds.
Under the ordinance, the City’s budget director would conduct an annual review of eligible TIFs, identify at least 25% of the TIF’s cash balance anticipated for future use, and declare that percentage a surplus. Some aldermen were concerned they wouldn’t have available TIF financing for future projects in their ward, and peeved they were expected to vote on the issue before they could speak to City budget officials.
The Finance meeting began at roughly 11:30 a.m., and aldermen were scheduled for a budget briefing at 1:00 p.m. “You’re coming before us and want to talk about it after we vote on something?” Ald. Anthony Beale (9) asked Kotak. ”I have projects that I could be looking down the road that you might not be familiar with that might need some TIF funding.”
“There is no interest or expectation of cutting projects off at the knees,” Kotak later told Ald. Harry Osterman (48). “There is, though, a recognition that we need to balance anticipated future uses with current uses. That’s the goal.”
When asked the size of the surplus, she said the mayor has allocated more than $400M to local government bodies for this year’s budget, and the expectation for 2016 is $113M surplus, but Ald. Burke pointed out that the City only gets $22M of that $113M. Roughly $60M will go towards Chicago Public Schools, and additional resources will go to other taxing bodies like Chicago Parks.
Other aldermen, particularly whose wards encompass TIFs in struggling community areas, spoke out as well. Ald. Jason Ervin (29) questioned whether this surplus definition battles with the state’s (the Law Department says no). Ald. Walter Burnett Jr. (27), Ald. Leslie Hairston (5), Ald. Willie Cochran (20), and Ald. Maldonado(26) sounded skeptical about the new ordinance or the effectiveness of the TIF program overall. Ald. Osterman asked for a hearing on the effectiveness of TIFs during the coming weeks of budget briefings.
Ald. John Arena (45) was the lone councillor who applauded the move out loud. Given an expected hike in property taxes, he said he supported TIF reform to lessen the blow, “What would be the downside to doing 50%?”
At the end of questioning, Ald. Burke decided to hold the issue in committee, “It seems to me that there’s unease in the committee with regard to taking action on this matter. There seems to be a good number of questions unanswered.”
Aldermen also spoke at length about a series of bond deals worth a total of $2.6B: City of Chicago General Obligation Bonds, Series 2015, totaling $500M; Chicago O’Hare International Airport General Airport Senior Lien Revenue Bonds, Series 2015A and 2015B, totaling $2B; and City of Chicago Wastewater Transmission Revenue Bonds, Project and Refunding Series 2015, totaling $125M to terminate associated swaps. A substitute ordinance to the Wastewater bonds includes $332M of conversion bonds, and requests approval for $100M in Illinois Environmental Protection Agency loans, and $350M of inducement authority.
Deputy Comptroller Jeremy Fine stood in for the City’s CFO, Carole Brown, as she met with other aldermen for a budget briefing.
Ald. John Arena was also vocal about the timing for this vote just before the Mayor’s budget release, and asked to delay the vote until the City saw positive movement from ratings agencies. “This seems like the absolute worst time. Until we have certainty in our budget, to be putting these things out…in October we’re not going to have a budget passed.” Ald. Waguespack also pressed Fine for more information about how ratings agencies weight bond changes.
But Fine said it’s an opportune time for the City to make a switch from a variable rate to a fixed rate, saying it’s proven out well for Chicago. “Once you go into a fixed rate mode, you shift the risks associated with any rating action to the investors, as opposed to the City.”
Ald. David Moore (17) chastised Fine for the late change to the Wastewater bonds, saying he didn’t have proper time to review and ask questions on such a large issuance. Several aldermen, including Ald. Cochran and Ald. Dowell, spoke out against a lack of African American representation in brokerage firms listed in the deals.
Ald. Willie Cochran, Ald. Pat Dowell, Ald. Scott Waguespack, Ald. John Arena, and Ald. Gregory Mitchell all voted no on the O’Hare and Chicago General Obligation bonds.
The committee also passed:
9 items from the Department of Planning and Development, including several school redevelopment intergovernmental agreements, and issuances of Multi-Family Housing Revenue Bonds as part of the Lawn Terrace Preservation Project and the Paul G. Stewart Apartments Phase III Tower Project.
A resolution authorizing a Finance Subcommittee to create memorials to two late Mayors: Martin H. Kennelly and Eugene “Gene” Sawyer.
14 appointments and reappointments to Special Service Areas.
Noticeably missing from Monday’s agenda was an ordinance on municipal depositories, backed by Mayor Emanuel, City Treasurer Kurt Summers, and several aldermen who held a press conference last week demanding that the ordinance be brought before committee. Summers testified separately to the committee about the City’s Investment Policy. Ald. Waguespack insinuated last week that pressure from banks was keeping Chairman Burke from calling the ordinance up for a vote.