Chicago poised to divert millions of tax dollars to private health provider

Under the guise of rehabilitating underserved communities, City Hall preps another massive tax transfer to a private company.

The Chicago Department of Planning and Development, or DPD, is evaluating a lucrative deal with Presence Health, Illinois’ largest Catholic health care network, Crain’s Chicago Business reports.

The negotiation, if approved, would redirect $5.5 million in property tax revenues to Presence for their $13.3 million development project located in the Loop, in exchange for a $15.5 million investment in care centers in underserved areas, according to Crain’s.

This reallocation of public funds is part of a Tax Increment Financing, or TIF, deal between Chicago City Hall and the Presence Health system struck in 2013. The stated purpose of such TIF arrangements is to spur urban revitalization by luring private interests with special incentives to invest in blighted neighborhoods.

But the realities of TIFs have proven quite different. TIFs have been shown to deprive local communities of resources necessary to deliver services – and the definition of “blighted” has expanded to include the city’s most developed areas. According to the Cook County Clerk, a remarkable 1 in 4 properties in Chicago are currently located within the confines of a TIF district.

TIFs continue to siphon property tax revenues into the obscured grip of City Hall, who is then enabled to dole out favors to politically connected private entities.

A repeat loser in this slush fund scheme is the Chicago Public Schools system. TIF arrangements, established by designated “TIF districts” effectively impose a ceiling on revenue permitted to be collected by public schools. Any revenue generated above this ceiling is placed into an opaque TIF treasury, set aside for “future development.”

Some school districts have even started to sue in response to TIF deals’ corrosive effect on public schools.

The fundamentals of standard TIF protocol are as follows:

• Municipalities, with the state’s blessing, affirm the necessity of government incentives to restore a blighted neighborhood.

• A TIF district is established.

• The total value of all properties within the district is equalized and assessed. The calculated property tax rate is then frozen for 23 years.

• For the duration of the TIF, taxing bodies such as City Hall, CPS and Metropolitan Water Reclamation District will continue to receive revenues proportional to the frozen rate. Meanwhile, each additional yearly property tax revenues are collected and placed into a TIF account.

• Funds from the TIF account are then only to be expended at City Hall’s exclusive discretion for the full 23 years.

The “revitalization” end of the agreement is never a guarantee – at least one study has found that TIFs have not spurred growth in Chicago – but the bounty of corporate welfare is often paid up front anyway.

Provided the TIF deal secures DPD approval, Presence is sure to cash in handsomely. But they will do so at the expense of Illinoisans who rely on the very services from which TIFs bleed resources.

TIFs are no new invention – and Presence is far from the first company to reap the benefits of this kind of ill-considered exchange. In fact, the Illinois General Assembly adopted the Tax Increment Allocation Redevelopment Act in 1977. But on Mayor Rahm Emanuel’s watch alone, TIFs have pilfered public coffers to the tune of $1.6 billion.

Beneficiaries of TIF-diverted revenues have in the past included brewing giant MillerCoors and food product manufacturer Hillshire Brands, among other examples of revenue misallocation and upward redistribution.

When Emanuel unveiled his proposed 2018 budget, he championed “the city’s $166.9 tax increment financing surplus,” according to the Chicago Sun-Times, trumpeting that $66 million of which would “go to the Chicago Public Schools to pay for security, Safe Passage and after-school programs.”

Rahm’s pledging of this fraction of the TIF “surplus” to CPS is little more than a political gesture. What the mayor fails to consider is what ripped funds away from CPS in the first place.