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After School Special: How The City Secretly Strong-Armed TIFsters Into Giving Money To Maggie Daley's Crappy Charity

"The charity founded by former Chicago first lady Maggie Daley received more than $900,000 in mostly undisclosed contributions from companies subsidized by much-criticized special taxing districts, according to a report released today by the city's top internal watchdog," the Tribune reports.

"After School Matters got 16 contributions - far more any other private, non-profit charity - found in the fine print of tax increment finance district agreements negotiated by city officials and aldermen under former Mayor Richard Daley, Inspector General Joseph Ferguson's report states.

"Ferguson, who has criticized the city's use of special taxing districts, said city officials were unable to explain exactly how and why charities received money. There is no oversight and no guidelines to evaluate the programs that got money."

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"In all, companies earmarked $915,000 of their TIF money for After School Matters," ABC7 reports.

"In addition, three non-profits with close ties to former Mayor Daley were on the clout list, and some aren't exactly community-based charities.

"The U.S Conference of Mayors, of which Daley was the chairman, got $125,000. And $50,000 went to UIC for the Richard J. Daley Library.

"When the inspector general asked City Hall higher-ups how organizations wound up on the clout list, he was told no one knew."

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"Neither the former mayor nor his wife will be available for questions," Crain's reports.

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"Let's just try to put this whole thing into perspective," Ben Joravsky writes for the Reader.

"The mayor takes roughly $250 million a year in desperately needed property tax dollars from our nearly bankrupt public schools and feeds them into a slush fund.

"He then disperses money from that fund to well-connected developers and or corporations who don't really need a public hand out at all.

"And they in turn donate money to the mayor's wife's favorite charity, which promotes after-school programs in the arts for children whose schools are too broke to have their own art programs. Because the mayor takes $250 million a year in desperately needed property tax dollars.

"And so we go round and round in the TIF circle game.

"Then the mayor and his friends hold big fundraising parties for the mayor's wife's favorite charity where they pat each other on the back for all the wonderful art things they're doing for the kids. Yes, the kids. As if anyone anywhere in power in this town ever does anything for the kids."

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"A million-dollar study, six years in the making, can't say for sure that After School Matters makes much of a difference."

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From the press release issued by the IG's Office:

"Private charitable entities are sometimes named as beneficiaries in Tax Increment Financing (TIF) redevelopment agreements (RDAs) through the inclusion of 'public benefits' clauses. Public benefits clauses are terms in TIF RDAs (as well as City grant agreements and land sale contracts) which obligate the recipients of the City subsidy to make donations to specific charities or public programs as a condition of receiving the City subsidy.

"The City identified 73 RDAs as including public benefits clauses from 1985 through 2009; 27 of those RDAs directed cash contributions to private non-profits. All but one of the 27 agreements were signed in the ten-period from 2000-2009.

"The review, which can be viewed online here, found a significant lack of transparency and accountability in the City's process of choosing specific non-profit organizations for inclusion in public benefits clauses.

"The IGO's review also established that among all recipients, both public and private, a single private non-profit organization was second only to the City itself in the number of mentions. In fact, that organization, After School Matters (or its KidStart Program), was named as a recipient in 59% of the agreements directing contributions to private non-profits.

"TIF recipients interviewed by the IGO established that, in the vast majority of cases, the private, non-profit recipients of public benefits were unilaterally chosen by the City. However, City employees responsible for the negotiation of TIF agreements were unable to articulate the criteria by which non-profits are chosen to receive donations through public benefits clauses, or how such decisions are made."

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"This is a specific example of the lack of transparency, accountability, and ownership the Mayor's Task Force on TIF Reform discussed earlier this summer," said Inspector General Joe Ferguson. "When the public can't see how their money is used to leverage benefits for private entities, we have a transparency issue. When the IGO can't get an answer to how those private entities are chosen, we have an accountability issue. When the City's administrators aren't able to explain the final outcomes, we all have cause for concern."

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From the IG's report:

"The IGO did not review and thus does not raise any question about the value of work done by After School Matters. With that said, the lack of transparency and accountability in the public benefits process raises an appearance of preferential treatment for selected private non-profits. In the case of After School Matters, such appearances are only exacerbated by After School Matters' close ties to the City and utilization of a City employee to oversee its grant writing and fundraising."

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"Of the 73 RDAs identified by the City as including public benefits clauses from 1985 through 2009, 27 agreements directed cash contributions to private non-profits. All but one of the 27 agreements were signed in the ten-year period from 2000 to 2009. The City provided the IGO with brief summaries of the public benefits clauses and could not say with complete certainty that the list reflected every public benefits clause, but asserted that the list was 'substantially complete.'

"The IGO's analysis of the data provided, however, revealed After School Matters (or its KidStart Program) as the most frequent private recipient of public benefits clauses. Of the 27 agreements requiring cash donations to private non-profits, After School Matters, an organization with close ties to the City, was named as a recipient 16 times, representing 59% of all of the public benefits clauses directing money to private entities. Those 27 agreements directed more than $3.7 million in cash contributions to private, non-profit entities, of which After School Matters received $915,000 - the second-largest total amount of all private entities.

"The Leland Apartments Development was the largest private recipient, having received a single donation of $1.25 million. Among all cash recipients both public and private, After School Matters was second only to the City of Chicago (named as a recipient 17 times). TIF recipients interviewed by the IGO established that, in the vast majority of cases, the private, non-profit recipients of public benefits, i.e. corporate charitable donations, were unilaterally chosen by the City."

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"As described by City employees who manage the TIF program, public benefits clauses are intended to ensure the TIF recipient's commitment to the community and to encourage civic responsibility among recipients of public funds. Public benefits clauses are included in TIF redevelopment agreements in the body of the contract and an attached exhibit. For many RDAs, however, the actual terms of the clauses are publicly unavailable as the City has not published on-line or recorded the corresponding exhibits detailing the specific terms of the public benefits clauses."

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"After School Matters or its KidStart Program were named as beneficiaries of 16 public benefits clauses, representing 59% of all of the public benefits clauses directing money to private entities and 25% of all cash donated pursuant to those clauses. No other private entity was named as frequently. Misericordia and Working in the Schools were each named twice.

"As shown in Appendix B to this report, the Leland Apartments Development, a one-time recipient of money through the public benefits clauses, received the single largest donation of $1.25 million. After School Matters received the second-largest total amount, equaling $915,000 received through 16 public benefits clauses. Although the list provided by the City may not include all public benefits clauses and paraphrased the actual contract terms, the IGO's analysis of the data provided reveals a clear predominance of After School Matters as the leading named recipient of public benefits clauses."

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"The IGO interviewed representatives from ten TIF developers, all corporations that received TIF subsidies pursuant to an RDA with a public benefits clause. Nine of the ten corporations had agreed to make charitable donations to After School Matters as part of an RDA. All but one of the corporate representatives reported that the City unilaterally chose the non- profits named in the public benefits clause.

"The one corporate representative who denied any City involvement explained that the corporation chose the beneficiaries, which included After School Matters, after the representative developed tentative guidelines for the corporation's civic giving. The representative explained, however, that having previously served as a deputy chief of staff to Mayor Richard M. Daley, the representative was familiar with After School Matters through previous partnerships with the organization."

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"Nevertheless, the individual emphasized that the decision to award After School Matters a portion of the funds specified in the public benefits clause was vetted by several committees within the corporation and that the involvement of Mayor Daley's wife in After School Matters played no role in the corporation's decision to donate to the organization.

"The terms of this particular public benefits clause were also unique in that they expressly provided that if the corporation failed to donate the full amount before the TIF project's completion, the City could reduce the amount of its TIF subsidy by an amount equal to the shortfall in charitable donations.

"The IGO did not identify any other public benefits clause for which the amount of an approved TIF subsidy that was actually disbursed was made contingent upon the amount of charitable giving.

"The other nine corporate representatives, however, informed the IGO that they learned the terms of the public benefits clauses during later stages of the negotiation process, after the TIF subsidy had cleared the CDC.

"In some instances, representatives reported that the specifics of the charitable donations first appeared in the term sheets, while others reported first seeing the terms in a draft RDA. In one instance, a corporate representative claimed to have first discovered the public benefits clause in the closing costs of the City's final proposal. When the individual representative questioned the clause, a City attorney replied that the clause was a standard term included in all City RDAs and that the RDA could not be approved without it."

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"The recent hiring of former Mayor Daley's last chief of staff and acting commissioner of the City's Department of Cultural Affairs to senior management positions in After School Matters after the change in mayoral administrations further strengthens the organization's close City ties, and fosters an appearance of possible preferential treatment."

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"Finally, the IGO recommends that the City make full public disclosure of all public benefits clauses and the terms of each clause included in any City agreement. The City has already published many RDAs on its website. But to provide full accountability and transparency in the TIF public benefits program, the City must ensure that each RDA includes all accompanying exhibits, including those detailing the terms of public benefits clauses."

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Comments welcome.



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Posted on October 4, 2011


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