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The [Monday] Papers

"When aldermen rushed to approve a $1.3 billion tax subsidy for the Lincoln Yards megadevelopment in April, the conventional wisdom at City Hall was that then-Mayor Rahm Emanuel wanted the deal done before he left office to burnish his legacy as a leader who made Chicago boom again," the Tribune reports.

"For developer Sterling Bay, there was uncertainty about reopening negotiations with incoming mayor Lori Lightfoot, who had expressed reservations about the deal for months.

"But the clock also was ticking for another reason. If Emanuel and Sterling Bay had waited much longer, the development no longer would have qualified for its record-high taxpayer subsidy, a Tribune analysis has found."

Strap in, folks. It's gonna be a bumpy ride.

"To get the money, the area had to meet at least five state standards to be considered 'blighted.' The city could then designate it as a tax increment financing district. At the time of the vote, the area met the bare minimum."

The term "blighted" has long set off TIF critics, seeing as how obviously wealthy areas far from blighted as the word is typically understood have somehow qualified for the financing scheme anyway. But the definition of "blighted" in the statute is not the same as the way you or I use the word. From a 2017 DNA Chicago post:

Chicago's Loop is "blighted." So is Old Town. And Lincoln Square.

At least they are according to the definition of "blighted" used when determining whether an area is eligible for the creation of a Tax Increment Financing district, a funding tool that uses tax dollars to support public and private development.

Whenever a new TIF district is proposed - there's one on the table now, in the North Mayfair neighborhood - "Show us the blight!" is often the first objection raised.

To many, the word conjures up images of gutted, near post-apocalyptic urban landscapes.

But under Illinois' Tax Increment Allocation Redevelopment Act, the definition of "blight" is far broader. The act established 13 factors for determining blight, of which a proposed TIF district must meet five. A separate set of factors is used if the land is vacant.

One of those 13 factors concerns property values. Back to today's Tribune:

"Less than six weeks [after Lincoln Yards was approved], new property assessments were completed. The rising values of the Lincoln Yards land meant the TIF district no longer met one of the five standards, according to the Tribune analysis of the values of hundreds of parcels."

Too late. The deal was done.

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"The Tribune asked Lightfoot aides and a Sterling Bay spokeswoman whether they were aware that rising land values could have affected city funding. They did not answer that question, and instead issued general statements.

Lightfoot spokeswoman Anel Ruiz said the administration "will carefully scrutinize" the project and money going forward. So far, Sterling Bay has won the right to be reimbursed for $488 million in costs, but has to return to the City Council to request the remainder of the $1.3 billion.

Company spokeswoman Sarah Hamilton said the TIF money is an "important economic development tool to benefit not just Lincoln Yards, but the entire city of Chicago."

If neither one of you are not going to answer the question, it's fair for us to assume y'all knew exactly what you were doing.

Also, Anel Ruiz and Sarah Hamilton, you are Today's Worst People In Chicago, though I have a feeling you're going to have company before I'm done with this story.

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Hamiton, by the way, is a former spokesperson for Rahm Emanuel (as well as the Chicago Police Department), which probably should have been mentioned in the article.

She doesn't appear to work directly for Sterling Bay, but instead is a hired gun as the managing director of Kivvit, which used to be David Axelrod's firm. Her job is to not tell the truth to reporters.

Instead, she does this:

"Head of Kivvit's Land Use Practice overseeing clients with developments ranging from small to mid- sized projects to 440 acre planned developments. Develop and manage communications and public affairs campaigns for clients including messaging, media relations, stakeholder recruitment, and events."

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Trib:

"The city plans to use as much as $1.3 billion to cover major public improvement projects needed to make the Lincoln Yards project work.

"The money is expected to cover most of the cost of five new bridges; a riverwalk; the realignment of the intersection where Elston, Ashland and Armitage avenues converge; 21 acres of parkland, a new Metra station; and the extension of The 606 recreational trail, said Ald. Brian Hopkins, whose 2nd Ward includes the area.

"Those are all things that the community wants, needs and will celebrate once they are open," said Hopkins, who supported the project. "And I don't know any other way to get them . . . That's why I supported Lincoln Yards."

If you don't know any other way to get infrastructure improvements in your ward but to jerryrig a TIF district, you should resign, Ald. Hopkins.

Also, see this thread from April:

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Trib:

"Anthony Stewart, co-founder of Black Workers Matter in the Austin neighborhood, disagreed [with Hopkins].

"Does anyone think the booming North Side is going to stop booming without city TIF money?" he said at a recent news conference supporting the lawsuit to halt Lincoln Yards.

"Instead of seeing investments in neighborhoods like mine, we see our property taxes diverted by mayor after mayor to the politically connected developers for projects in some of the richest neighborhoods," he added.

He's not wrong. In fact, people fed up with that is one reason why Lightfoot got elected. Was she in on it or did she just get played? Hard to say, especially given that she refused to answer the Trib's questions.

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"Leading the effort to create the Lincoln Yards TIF district were two aldermen - then-Finance Committee Chairman Ald. Patrick O'Connor, 40th, and the 2nd Ward's Hopkins."

Remember, O'Connor was Rahm's floor leader - his right-hand man on the council. (Before that, he was Daley's floor leader.)

"Both said they weren't aware of any behind-the-scenes concerns about the rising assessments."

In other words, both said they did their jobs incompetently! C'mon. O'Connor, in particular, is at least savvy enough in real estate to personally benefit from changing property values.

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City Hall knew.

"The city's redevelopment plan noted that if 2018 assessed values were finalized before the TIF vote, the new numbers would have to be used. And Emanuel's planning commissioner and another top department official were having discussions about the value of the Lincoln Yards land and what was going on with them, according to e-mails the Tribune obtained through an open-records request."

I would call that a smoking gun.

"In late February, Deputy Planning Commissioner William Jeffries told then-Planning Commissioner David Reifman that the final state 'equalization factor' - a necessary component of determining the equalized assessed value - would likely be released in May.

"It came out May 20, the final piece of the puzzle to set the 2018 assessment figures. On June 20, the assessments were made official by the county clerk. That's the point at which the information was available for the city to update figures to determine whether the TIF district was eligible.

"Reifman did not return a call seeking comment for this story and referred the matter to current city officials. Before Reifman went to work as Emanuel's planning chief, he was a partner at DLA Piper, which represented Sterling Bay in TIF negotiations with the city."

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Again, let's go back to April:

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And as I observed then:

Meanwhile, who is planning commissioner David Reifman? Well, for starters:

"Though hardly a household name, this heavy-hitting zoning guru has repped some of the biggest real estate developers on some of Chicago's most transformative projects in recent years," Chicago noted in 2016.

Boldface mine.

"When the mayor plucked Reifman in September for this key City Hall job, developers clinked their shovels in a toast."

Just so you know who he is.

Then, the next day:

"To the testimony of Reifman, who Spielman is so sick of, we'll turn back to WBEZ:

And address them they did - for five hours - with aldermen asking questions and David Reifman, head of the Department of Planning and Development and a cheerleader for the project, answering.

Ald. Leslie Hairston, 5th Ward, questioned how the Lincoln Yards area, on prime real estate along the Chicago River and sandwiched between two of the most affluent neighborhoods in the city, could be considered "blighted," a prerequisite for consideration as a TIF district.

"Just because it's vacant does not make it 'blighted,'" said Hairston. "If you want to look at blight, I've got several areas in my ward."

Reifman responded by pointing out photos of the Lincoln Yards site. "As you can see, this is vacant, unutilized, infrastructure-less land," said Reifman. Hairston told him there's a big difference between a multimillion-dollar vacant lot and a $25 vacant lot. "There's no way that you can make me think that this is blighted," said Hairston, "and I don't think it goes with the intent of the TIF law."

You'd have to squint awfully hard to even begin to think Reifman was right in this exchange.

Now, you might say, hey, wasn't he technically right about the term "blighted?" And I'd say, barely - by squinting awfully hard - and not within the intent of the law, as Hairston pointed out. He also knew that the site would soon be unblighted.

"Reifman suggested at several points the city could lose the development altogether. "Capital can go anywhere. They don't have to come to Chicago. They can look at the decisions we make today and say, 'You know what? We can go anywhere in the world."

Capital wants to come to Chicago. They should be paying us for the privilege!

"He said Lincoln Yards developer Sterling Bay is investing $300 million in infrastructure improvements unreimbursed. He said the TIF-funded improvements, which the developer will complete and the city will reimburse later, likely by issuing 'TIF Notes,' will help the entire 'region.'"

Citing those unreimbursed infrastructure improvements is plain disingenuous. What Sterling Bay is saying is, hey, let us build this motherfucking megaproject and we'll even install the roads, lights and bushes just where we want them! And then you can reimburse us for the rest - the TIF stuff! Whatta deal.

"Ald. Brian Hopkins, whose 2nd Ward includes Lincoln Yards, said putting off the vote was the wrong thing to do. 'Just like when New York City walked away from Amazon and said No thank you, we don't want all those jobs. And there's a backlash to that today, there's an outcry when people realize what folly that is. I won't let that happen here.'"

First, there is no backlash - not among the residents and taxpayers of New York City. Second, taxpayers said they didn't want to pay for all of those Amazon jobs! Let Amazon, the third most valuable company in the world, run by the world's richest man, pay their employees themselves! Brian Hopkins, you are Today's Worst Person In Chicago.

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"Hopkins called opponents 'misguided and misinformed' and touted the 10,000 construction jobs and 23,000 permanent jobs the Lincoln Yards development is expected to generate."

I don't doubt the project will create jobs - duh - but at what cost? Also, these projections always fall well short of what we're told come approval time.

That said, I'm sure there is a lot of misinformation out there - much of it propagated by Reifman!

Who is misinformed now, Ald. Hopkins?

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Trib:

"Among hundreds of pages of e-mails obtained by the Tribune were communications Reifman had with attorneys from DLA Piper, many of which were redacted. Reifman has said he gave up his professional and financial interest in the law firm in August 2015.

As Emanuel aides worked behind the scenes, the race to determine Chicago's next mayor was playing out. Candidate Lightfoot said the Lincoln Yards project was moving too fast and City Hall "should wait until there is a new mayor."

The City Council, however, pressed ahead. By the time Lightfoot was elected April 2, aldermen already had approved Sterling Bay's construction plans. A key vote to create the TIF district was scheduled for April 8 at the Finance Committee.

Late on April 7, Lightfoot asked for a delay, and Emanuel agreed.

The following day, top aldermen and Emanuel aides retreated to a side room off City Council chambers. Ald. Scott Waguespack recalled an exchange with Reifman, the planning commissioner.

Reifman "stuck his finger in my face" and told me that putting off a vote until Lightfoot had taken office "would put a stop to the TIF moving forward," said Waguespack, 32nd, who voted against the plan.

Bingo.

Lightfoot, who wouldn't be sworn in until May 20, faced a tricky political situation. The votes were there to pass the Lincoln Yards TIF over her objection, and she risked suffering a major loss before she was even mayor. Lightfoot also faced pressure from business interests and construction unions that wanted the project to proceed.

So Lightfoot negotiated with the developers. On April 9, Lightfoot announced that she'd secured promises for more of the construction work to go to minority- and women-owned firms. She dropped her opposition, and the next day aldermen voted to approve the TIF district.

This episode remains a bit foggy. It's still not clear exactly what Lightfoot was told and if she had better options. Her own statements have been opaque. Did she fold? Should we now start calling it Lightfoot Yards?

O'Connor, Emanuel's floor leader, insisted that Emanuel would have pulled the plug if Lightfoot had wanted him to.

"In the end, it was clear it was not the deal she would have made, but was something she felt comfortable enough with to move forward," O'Connor told the Tribune recently. "If she said 'no way,' it would have died."

If this is true, Lightfoot has a lot of explaining to do. But not everyone thinks it's true.

Waguespack, who is now Finance Committee chairman, sees it differently.

"She wouldn't have been able to stop it," he said. O'Connor and Ald. Edward Burke, 14th, who had handled property tax appeals on some properties for Sterling Bay, "would do everything they could to see it through."

And Rahm would have had (im)plausible deniability.

Waiting to vote until after Lightfoot took office in mid-May would have had the effect of setting the reset button. Not only could Lightfoot look to cut a different deal with Sterling Bay, but the approval process would have begun anew and could have stretched on for months.

By that time, tax assessments would have been finalized - and the rising property values meant Lincoln Yards no longer would have met the state standard to be declared a blighted area and eligible for TIF status.

By now you're probably wondering what Lightfoot has to say about all of this.

"Lightfoot declined an interview for this story. Her administration did not answer a list of questions. Instead, a spokeswoman issued a statement reiterating points Lightfoot made after the April vote suggesting that not everything in Sterling Bay's plan was a done deal."

This is unacceptable. When someone "takes the Fifth," you are not supposed to presume guilt under our system of justice. But when someone refuses to answer reporters' questions, I believe you are almost always within your (metaphorical) rights to presume guilt. I initially believed a version of this story that was at least mildly in Lightfoot's favor. Now I can only believe the worst - that she blew it, one way or another.

*

Postscript:

"The Tribune's finding comes as community groups are asking a judge to reverse the City Council's decision. They say the area is not blighted and would be redeveloped without the taxpayer assistance, given that it's centered on the Chicago River just west of Lincoln Park . . . Critics contend such projects don't meet what's called the "but-for test" established for TIF districts across the country. To pass the test, public officials must show that development would not occur in the TIF area without - or but for - the tax subsidy.

"Opponents also question whether TIFs truly pay for themselves through the tax revenue they generate, as supporters argue, or actually boost the overall tax burden due to the need for additional city services.

"Perhaps nowhere is the question more pertinent than Chicago, where TIF districts blanket the city to an extent not matched by any other big city in America, according to a 2018 study by the nonprofit Lincoln Institute of Land Policy. A recent Cook County clerk's report determined that more than a third of property taxes collected in Chicago get funneled into 138 special taxing districts that include a fourth of the city's properties."

*

Post-Postscript:

Just because Rahm is no longer in office doesn't mean he shouldn't be questioned about things that happened when he was in office. After all, reporters still seek out his views on, say, the Democratic primary, and he remains very much a public person. Besides that, he owes us. If he refuses to answer reporters' questions on topics like this, he should not be sought out on other topics - and he should no longer be allowed to be employed as a contributing editor for The Atlantic or a commentator for ABC News. Then again, he shouldn't have those jobs anyway.

*

Post Post-Postscript:

Here's what I think happened. Rahm told Lightfoot that delaying the deal was impossible because that meant killing the deal. Lightfoot didn't campaign on killing the deal, but on slowing it down and "doing it right." Rahm, knowing that the TIF designation was slipping away, told Lightfoot that by delaying it she'd be killing it, and she wasn't willing to do that, right or wrong. Too much money at stake, and too much risk of alienating too many people she'll need down the line. That's why no one wants to say what really went down. Now, I don't think Rahm ever had any intention of letting her kill the deal, but he probably didn't have to say that. Everyone got cover. And to save face, Lightfoot was given some additional minority participation so she could say she got something out of the one-day delay.

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The Beachwood Tip Line: Agreeing doesn't play into it.



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Posted on August 26, 2019


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