How Megaprojects Perpetuate Income Inequality Is A Major Issue For Next Chicago Mayor

Editor’s Note This is Part 1 of Aaron Cynic’s series on the issues that Chicago’s mayoral candidates need to address, which amplifies the perspectives of grassroots activists. Please make a donation to help us fund this critical reporting.

Throughout Chicago Mayor Rahm Emanuel’s two terms, residents saw an incredible amount of money and resources pour into the coffers of big corporations to encourage economic development. Hundreds of millions of dollars were handed over to entities to encourage economic growth, however, entire swaths of the city—particularly in areas heavily populated by people of color—have seen little return on investments made with their tax dollars.

“Development that does not address displacement is not development, it is whitewashing our neighborhoods and our communities,” said Amisha Patel of the Grassroots Collaborative at a November press conference at the site of a proposed mega-development in Chicago’s Lincoln Park neighborhood. The project has been dubbed “Lincoln Yards” by its owner, real estate developer Sterling Bay.

Sterling Bay bought the property, which sits along the North Branch of the Chicago River, for an estimated $100 million in 2012. In the last few months, Sterling Bay has unveiled several drafts of its big plans for the development, which include 12 million square feet of office, residential, retail, hotel and entertainment space, and a small smattering of parkland. In total, the project could cost more than $5 billion.

The press conference Patel spoke at was the first stop on a day-long bus tour hosted by Grassroots Collaborative, where they asked attendees to “reimagine Chicago” and discuss their hopes for what the city could look like under a new mayor and City Council. Chicago voters have a choice between at least 15 potential candidates for mayor in the upcoming February elections, along with more than 200 other hopefuls running for a position on its 50-member City Council.

On January 11, the city’s Joint Review Board, the body which decides if a proposed Tax Increment Financing (TIF) meets the eligibility criteria for the subsidy, approved a $900 million TIF which will go to Sterling Bay to help build the infrastructure for the development.

The proposed development at Lincoln Yards has become a flashpoint for Chicagoans all too accustomed to seeing truckloads of money funneled away from struggling neighborhoods and delivered to wealthy corporations and developers via TIF districts.

TIF districts capture property tax revenue growth in a particular area for a set amount of time—usually about 23 years. That money is then diverted into a special fund meant for projects designed to eradicate blight in neighborhoods and spur growth. On the surface it sounds like a noble endeavor, but in practice the process often shifts money from public services to private entities that already have access to funds.

Writing for the Chicago Reader, Ben Joravsky explained: “When the City Council approves a TIF district, it basically freezes for 23 years the amount of property taxes the schools, parks, library, city, county, etc. can collect from property owners in that district.”

“As property values in the TIF district rise, the new tax dollars that property owners must pay get diverted from the schools and parks, etc. into a bank account largely controlled by the mayor,” Joravsky added.

The approval process for the Lincoln Yards TIF exemplifies the top-down way business as usual works in Chicago. Governing bodies have pushed it forward despite public hearings packed with people either fully opposed to the project or at least asking the city to slow down the process, especially with the upcoming mayoral election.

While certain aspects of the proposal were scrapped, such as a soccer stadium and music district which would have been run by entertainment behemoth Live Nation, the project as a whole continues to move forward, leaving community members wondering why.

At a packed planning meeting in November, Katie Tuten, co-owner of The Hideout, a small independent music venue which would have been heavily impacted by the corporate-owned music district, was one of many people asking city officials why they have rushed plans through.

“We are here to say let’s slow this process down,” Tuten said. “Wait until we have a new mayor and City Council in place.”

Interestingly, as the meeting opened, 2nd Ward alderman Brian Hopkins declared that he had introduced legislation to protect the Hideout by giving it landmark status. It was the first Tuten or anyone had heard of the idea.

“Thank you so much for bringing us up to historical landmarks, but you did it without even talking to us. I think it’s a perfect example of how this process has been run,” Tuten responded.

Tuten is also the co-chair of a newly formed organization called the Chicago Independent Venue League (CIVL), who requested the process be slowed down and all of the plans made fully available for public review.

“Responsible development will bring desperately needed new tax revenues to our indebted city government,” wrote CIVL in an op-ed for Crain’s Chicago. “It will bring new blood into the city and new patrons into our venues. But when we talk about TIFs, we’re talking about using taxpayers’ money. And those funds should be spent on projects that benefit the entire city and all the taxpayers.”

“The horrible abuse of TIF funds and the total power that is held by one person, or the mayor, and aldermen to decide where literally billions of dollars go is undemocratic and actually furthering the economic inequality in the city instead of helping to address or reduce it,” asserted Patel. “There’s a massive shift needed around how you think about TIFs and corporate taxes and the role of the CEOs making skyrocketing profits. What’s their role in reinvesting in the city that’s allowed that to happen?”

Some Chicagoans argue that the entire process is irredeemable and the sooner it’s scrapped, the better off residents will be.

“If you think you can reform TIFs to make them work, you’re mistaken,” said Tom Tresser, a lead organizer with the TIF Illumination Project, a group that has held 74 public meetings and investigated TIF impacts on a ward-by-ward basis. “They should be abolished. They’re racist. They contribute to structural inequity in the city.”

“If I were the czar of elections, I would make it so you’d have to put that in your questionnaire,” Tresser added. “Do they think TIFs are workable? If so how, will they vote to abolish them?” He also suggested candidates should be asked about their plans for grassroots prosperity.

Tresser’s mantra is “Chicago’s not broke,” which is also the title of a book of short articles by experts on how to generate revenue in Chicago. He believes that whoever will be the next occupant of the fifth floor of City Hall should “think big.”

“We’ve been living off crumbs for so long,” said Tresser. “The right and business community have ruled us for so long. We’ve got to get away from all that and think big.”

“The challenge is to reject the politics of clout that says the way to improve the city is project by project. That hasn’t worked,” Tresser contended.“That just doles out a few choice morsels. Step back and think big for the whole city.What does it need as a whole to make it great? We have the money to build whatever the answer is. There’s money here.”

While proponents of TIF financing and other subsidies to big business say that it helps job creation, Patel pointed to a 2013 study done by the Grassroots Collaborative that insists jobs created by TIF projects “should more accurately be called ‘job transfers.’”

According to the study, from 2002-2011, downtown job growth primarily benefited workers living outside city limits. Only one-in-four new jobs located downtown went to Chicago residents. And while developments like Lincoln Yards are not downtown, both the process and the end result—massive gentrification—are the same.

Tresser said development was one thing but using public dollars to finance development was another.

“I guess I’m an old school capitalist. If business wants to do business, that’s fine, but I don’t want them to get any of my money,” Tresser shared. “You take the risk and get the rewards. If these developers want to buy something, go with God, but don’t use my public money.”

Reforming or even altogether scrapping the TIF process is one small piece of the puzzle of re-imagining a Chicago, where economic development is centered on the needs of neighborhoods instead of wealthy developers.

Patel points to several pieces of legislation and other organizing efforts from the community that a new mayor and City Council would already have available to them for reforms.

“There’s legislation that’s existed for the last year, if not longer, in cases that’s been buried in the rules committee. And it comes out of community organizing and lived experiences in neighborhoods that would directly affect some of the biggest issues facing our communities,” Patel stated.

“For example, there’s legislation connected to protecting families along the 606 in Logan Square that would help to stem the force-out of low income longtime Latinx families because of mass gentrification.”

“There’s organizing happening around the Obama [Presidential] Center and pushing through a community benefits agreement. There’s legislation that the Chicago Coalition for the Homeless [has] been pushing forward, which would put proceeds of sale of luxury homes to prevent homelessness in the city.”

As Patel concluded, plenty of legislation that would be “transformative” exists, and that is because organizers have already done the work to create an alternative vision.