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How do you spell wealth redistribution? Tax-increment financing

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By Michelle Malkin  •  October 1, 2009 10:00 AM

When I worked in Seattle covering corporate welfare and city government, I became strange bedfellows with a diverse alliance of libertarians on the right and Ralph Naderites on the left who oppose “public-private partnership” deals between developers and statist Democrat AND Republican politicians.

These “public-private partnership” scams inevitably involve tax-increment financing gimmickry to siphon off tax dollars to subsidize developers/builders/contractors who then reward politicians with big campaign donations. (See here for how it works.)

The Chicago Olympics bid involves TIFs at a massive level.

And voters oppose it at their own risk — including threat of violence against them by their own representatives!

Remember the video from March 2009 of an unhinged Chicago alderman attacking a citizen who dared to challenge the wealth redistribution TIF scheme?

Ben Joravsky at the Chicago Reader has been on the case from day one. From his blog in January 2009:

Earlier today Mayor Daley told reporters that, yes, the Reader had it right all along: he was planning to pay for the Olympics with money out of his favorite slush fund–the TIFs.

“You should have listened to what Ben told you two years ago,” Daley said. “Of course, we’re paying for it with TIF money. C’mon, people, don’t be stupid! Do you think it’s going to pay for itself?”

Just kidding! He didn’t actually say any of that. But Lori Healey, formerly the mayor’s chief of staff and now the president of the Chicago 2016 bid committee, told aldermen today that the city would be paying for the proposed Olympic Village with TIF dollars. “If the city is selected to host the 2016 Summer Games, it will carve out a new TIF district from the existing Bronzeville TIF to help fund new roads, sewers, and other infrastructure needed for the Olympic Village,” she said, according to an article in Crain’s.

Just to keep track of the bouncing ball: First the mayor insisted there would be no public money for the Olympics. Then he flip-flopped–at the insistence of the United States Olympic Committee–and had the City Council put up $500 million (“skin in the game”). Then he went back to the no-money line, at least in comments to folks at last fall’s budget hearings. Now it looks like we’re kicking in TIF dollars after all. If we stick around long enough, I’m sure he’ll say we’ll pay for the games with parking meter revenue. Oh, wait–he sold them off last month.

As for the Michael Reese site deal, the spin–and these guys are always spinning when it come to TIFs–is that it’s money we’d be spending anyway even without the Olympics.

Sure it is. As though the city, which can barely find the money to pay to clear snow from its streets, has no more pressing need than to buy Michael Reese Hospital, tear it down, clean the site of toxins, and build a bunch of condos.

Remember, TIF dollars are property taxes that could be spent on schools, parks, police, fire, or antipoverty programs. Or it’s a tax that they might never have made you paid for in the first place.

And from the Chicago Sun-Times in August 2009:

Chicago taxpayers must spend $100 million to transform the old Michael Reese Hospital site on the Near South Side into an Olympic Village.

On Wednesday, Mayor Daley’s Olympic bid team confirmed the $100 million pricetag to install roads, sewers and utilities, raising questions about how the Chicago 2016 organizing committee and Daley can continually say the games won’t cost taxpayers a dime — especially at a time when the city is dealing with a mounting fiscal crisis.

While Chicago won’t know until October if it beat out its competition to win the 2016 Summer Games, the city has agreed to create a tax-increment-financing (TIF) district surrounding Michael Reese to generate the $100 million subsidy.

TIFs re-direct taxes away from schools, parks and other local government agencies bankrolled by property taxes. Property taxes within a TIF district are frozen at existing levels for 23 years.

The decision to draw a $100 million subsidy from the tax-increment-financing (TIF) — or create a TIF within a TIF to generate even more money — comes at the worst possible time for Chicago taxpayers.

Most of the city’s unionized employees have been forced to swallow furlough days and other concessions to eliminate a threatened $300 million year-end shortfall. More than 430 members of two unions that refused to make concessions have been laid off.

Next year threatens to be even worse. Daley’s preliminary 2010 budget has a $520 million gap that can only be closed with service cuts, tax increases or a combination of the two. Some aldermen want to use unallocated TIF money to eliminate that shortfall.

Ald. Joe Moore (49th) said the $100 million subsidy “doesn’t come as a shock,” given the expense of building new streets, water and sewer lines to the Michael Reese campus.

But, he said, “It begs the whole question about whether this is a good time for the Olympics, given our financial straits.”

Put that on the White House reality check blog.

***

Speaking of wealth redistribution, look what happened quietly on Sept. 9, 2009 to the Grove Parc complex (sitting in the shadows of the proposed Olympics site) that Valerie Jarrett’s Habitat Company ran into the ground:

Grove Parc Apartments

The next ordinance authorizes the purchase of the HUD mortgage on the 504-unit complex called Grove Parc Apartments to help facilitate the redevelopment of the property in the Woodlawn community.

The $12 million mortgage will be purchased by the City for $1,000 and the reduction of the debt will make financing the redevelopment more feasible. Grove Parc is a project-based Section 8 development at 61st St. and Cottage Grove Ave. in the 20th Ward.

The developer, Preservation of Affordable Housing, Inc., will preserve the Section 8 units and build at new mixed-use development at the location, including 65,000 square feet of retail space.

Plans call for the phased demolition of the complex and the construction of a new development called Woodlawn Park with 420-units of new mixed-income housing and the existing Section 8 units on the rebuilt site.

The rehabilitation and new construction of these units is an important part of the City’s strategy not only to create affordable housing but to preserve housing for long-term affordability.

To begin the Grove Parc project, Preservation of Affordable Housing, Inc. will receive $1 million from the left-wing MacArthur Foundation’s “Windows of Opportunity.” Valerie Jarrett sits on the MacArthur-funded “Preservation Compact Leadership Committee.”

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