BGA President & CEO Andy Shaw offers ways for Chicago to get its TIF act together in his bi-weekly column for Crain’s Chicago Business.

Most of us don’t trust government—local, state or federal—to spend our tax dollars wisely or make sound policy decisions that affect our lives and communities, and that cynicism is reinforced every time we learn about another apparent attempt by public officials to hide their backrooms deals, even from their own government colleagues.

Exhibit A is a recent investigation by Crain’s Chicago Business and the Better Government Association that uncovered a shell game played by local officials to quietly shift $55 million from Chicago’s Tax Increment Financing (TIF) program, which is limited to economic development in blighted areas, from construction of a hotel near McCormick Place to renovation at Navy Pier, one of the state’s most popular and profitable tourist attractions. “This is unconscionable,” said Ald. John Arena when we told him about it. “We were lied to.”

Read The Original Report: How City Power Players Diverted $55 Million In Blight-Fighting TIF Cash To Navy Pier

Officials at City Hall and McPier, the agency that controls the McCormick Place complex, refused to answer our questions while we were researching the story, but now they’re claiming the TIF money the City Council approved for the hotel project didn’t actually end up at Navy Pier. At best that’s disingenuous accounting gimmickry. McPier earmarked several hundred million dollars, including the city’s TIF money, for a mega-development that included the new hotel. The pot was big enough to build the hotel without the TIF dollars, so $55 million was transferred to the underfunded Navy Pier construction account without public disclosure.

McPier CFO Richard Oldshue inadvertently confirmed the shell game in an email to a Springfield legislative analyst: “We don’t actually get any (TIF) funding…It’s a one-time arrangement that we are just a middleman in. We pass it along in full.” That’s the sleight of hand Crain’s and the BGA uncovered to the chagrin of Ald. Arena and his City Council colleagues, along with others who were deceived by a deliberately opaque process.

“This is outrageous,” said Ald. Pat Dowell, whose ward includes the new hotel. She approved TIF money for that project and would have welcomed $55 million for economic development in another part of her ward if the hotel didn’t need it. Neighborhood activist John Jacoby called it “total subterfuge” and demonstrators at a protest outside Navy Pier chanted, “We need teachers, we need books, not Ferris wheels or City Hall crooks.”

This is the latest transgression in a city TIF program that’s been steeped in secrecy and mired in controversy since its inception three decades ago. Too many of the billion-plus TIF dollars doled out over the years funded vanity projects in hardly blighted Downtown instead of economic developments in underserved neighborhoods. The Emanuel administration claims to have reformed the program, but obviously not enough.

It’s time to consider additional steps, including:

  • An investigation by the city’s inspector general and perhaps a legal attempt to claw back the $55 million from Navy Pier;
  • A commitment from aldermen who claim to have been hoodwinked to do their homework before casting votes;
  • A demand from the City Council’s new financial watchdog for more details on every TIF proposal and regular updates on current projects;
  • A City Council hearing with testimony from experts who can suggest amendments to the TIF ordinance that bake in transparency and spending guidelines.

“Time and time again we’re finding the lack of oversight leads to a cavalier expenditure of taxpayer revenue,” said TIF expert David Orr, the Cook County Clerk. “Transparency is at the heart of the matter. If the city handled its transparency issues in a fundamental way neither aldermen nor investigative journalists would be calling.”