Chicago Nonprofits Slam City Over Taxpayer-Funded Development

CHICAGO (CN) – Two Chicago nonprofits filed a lawsuit against the city in state court on Wednesday, claiming the city council’s approval of plans to use billions in taxpayer money to redevelop a predominantly white, wealthy area violates laws protecting civil rights and governing tax allocation.

The 58-page complaint filed by Grassroots Collaborative and Raise Your Hand for Illinois Public Education claims that Chicago’s city council wrongfully approved “a massive redevelopment plan for the area around Lincoln Yards, a North Side area sandwiched between three of the whitest, wealthiest, and most economically vibrant neighborhoods in Chicago,” that includes up to $1.3 billion in tax money generated from a program designed to help disadvantaged parts of the city.

This flies in the face of “Chicago’s rapidly growing wealth inequality, entrenched racial and ethnic segregations, and the struggle to adequately fund a viable public education system and stem the loss of student enrollment,” according to the complaint.

Grassroots Collaborative is an organization that advocates for equitable policy across the state of Illinois, including the closure of corporate tax loopholes, while Raise Your Hand advocates for quality public education.

The tax program in question, called tax increment financing, or TIF, is “a program designed to spur economic development, which would not occur without economic support and incentives, in blighted areas,” according to the complaint.

The subject district approved by the city council, known as the Cortland and Chicago River TIF District, covers 168 acres of land that is part of what was previously known as the North Branch Industrial Corridor and includes parts of the Bucktown, Wicker Park and Lincoln Park neighborhoods.

The plaintiffs, represented by Aneel Chablani with the Chicago Lawyers’ Committee for Civil Rights and others, claim that the city’s redevelopment plans for this North Side area are in violation of the Illinois Civil Rights Act and the Tax Increment Allocation Redevelopment Act.

Their complaint states that the plan to siphon $1.3 billion from the general property tax base in order to benefit the well-to-do, mainly white TIF district “is just the latest in a long history of rampant abuses.”

The complaint goes on to note that Chicago has used the TIF system as a tool for economic development for over 30 years, but that misuse of the system has benefitted areas that already enjoy natural economic growth instead of blighted or at-risk areas that naturally would not.

According to the complaint, “By enabling TIF districts to be created in areas,” that are not blighted or suffering from symptoms of blight, “the city not only has violated state law, but it also has administered the TIF system in a racially and ethnically discriminatory manner” that sends hundreds of millions of dollars to majority-white census tracts to the detriment of majority-black and majority-Hispanic areas and creates “stealth tax hikes” outside of the normal budgeting process.

The groups say the city’s approval of the Cortland and Chicago River TIF is an example of this. The nonprofits claim that approving these kinds of tax districts allows for “an unrestrained process without limits to the amount of taxpayer dollars the city can make available to entice developers to build in areas in which they otherwise would have built without the subsidy.”

One barrier that needs to be passed for a TIF district to be created is called the “but-for” test, which essentially outlines that the area being subsidized would not anticipate development without the adaptation of the redevelopment plan. The nonprofits find that the Cortland and Chicago River TIF fails this test, in addition to it not being blighted.

The complaint points out that the Cortland and Chicago River TIF is already expecting “a 28-fold increase in property values over its 23-year span, starting from approximately $87.4 million and rising to $2.5 billion,” questioning why it needs a taxpayer-funded subsidy for redevelopment when it is already leveraging high potential for property value growth nonexistent in areas that the complaint argues really need the assistance of the TIF system.

Approval of the Cortland and Chicago River TIF and one other approved in 2019 would bring the city’s total to 148. The complaint states that one in four properties in Chicago is located in TIF districts.

The complaint asks the Circuit Court of Cook County to declare the administration of the TIF system invalid, enjoin activity in furtherance of the Cortland and Chicago River TIF District and order the city to implement a fair process for creating the districts.

In a Wednesday press release, Grassroots Collaborative stated that “the creation of the Cortland and Chicago River TIF District…is a blatant example of just how off course Chicago has gone from the original intention of the TIF program,” and that “immediate action is required to bring the TIF program back in line and ensure that our property tax dollars are spent equitably.”

A representative with Chicago’s Department of Law could not comment on the lawsuit as it had not yet received the suit as of late Wednesday afternoon.

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