Residents sue to stop Wilson Yard project, claim TIF abuse
(Crain's) — A residents group has sued to block a major mixed-use development under way on the Wilson Yard site in Uptown, charging that project’s developer improperly received a $51-million city subsidy to finance it.
The lawsuit targets the city’s use of tax-increment financing, a popular development tool that critics say has been badly abused by City Hall by diverting hundreds of million of dollars in property tax revenues into favored real estate projects. The residents group disputes the city’s contention that the six-acre North Side site would not have been developed if the city didn’t provide financing.
“It’s a developer’s dream to have that large of an undeveloped parcel in the city,” says Molly Phelan, president of the group, Fix Wilson Yard Inc. “There’s no reason to use TIF funds to have a developer come in and develop this site.”
Chicago developer Peter Holsten broke ground this fall on the project on Broadway between Montrose and Wilson avenues, formerly a Chicago Transit Authority train repair shed. The development will include a Target store and 178 affordable and senior housing units.
See related story: “Wilson Yard developer lands financing for Uptown project”
Mr. Holsten, who controls entities named as defendants in the suit, did not return a phone call seeking comment.
The City of Chicago is also a defendant. A spokeswoman for the city Law Department disputes the allegation in the lawsuit that the city has violated state laws governing TIF districts, but declines to comment specifically on the Wilson Yard project.
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In TIF districts — areas that city officials believe need a development boost — the city freezes property tax revenue that goes to government bodies, such as school districts. As rising property values generate higher tax revenue, the additional money is set aside for projects, like Wilson Yard, that city officials say wouldn’t happen without a subsidy.
The 402 active TIF districts in Cook County generated $892 million in revenue last year, up 11.5% from $800 million in 2006, according to a recent report by County Clerk David Orr.
TIF critics charge that the districts deprive local governments of much-needed revenue and raise money for city officials’ pet projects without enough oversight. They also say that many developers that receive TIF grants would have been able to finance the projects without government help.
“When you have a city with a significant budget crisis and underpaid pensions, it’s time to stop frittering away the taxpayers’ dollars,” says Thomas Ramsdell, the attorney representing Fix Wilson Yard, which says it has more than 2,000 members. “You’ve got a group of citizens who are tired of it and are ready to fight City Hall.”
The lawsuit, which was filed Wednesday in Cook County Circuit Court, asks a judge to prevent the city from providing TIF financing to the Wilson Yard project. Among other things, the complaint alleges that the city improperly approved changes to the development—including an increase in its budget to $150 million from $130 million—without adequate review of public input.
Moreover, it charges that the city violated the Illinois Open Meetings Act by not giving enough notice of an October meeting in which the TIF agreement was approved.
Uptown residents “will be irreparably harmed by the illegal diversion of substantial tax revenues from public bodies to private development projects” like Wilson Yard, the complaint says.
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As an uptown resident it hurts me to see my fellow community members fighting to stop growth and economic development. In times like these we are lucky to have projects in the pipeline. Why would you want to take jobs, revenue, and increased conveniences from the community? I love Uptown but we have a lot of room for improvement.
Obama and those newly elected have been pushing infrastructure and government backed development. TIF has been effectively doing so for year. It pays for itself and allows for the greater good of the community.
I urge to do some research. You can easily find dozens and dozens of case studies.
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TIFS are a slush fund wherein Daley deems areas of the city (Loop, LaSalle Treet corridor) TIF districts that are NOT blighted by any stretch of the imagination...the slush fund that TIF districts coontribute to is then used by Daley to reward developers...or in all likelihood to create a giant pot of money to subsidize the 2016 Olympic bid.
My issue is NOT with the neighborhood. My issue is with government THROWING money at developers to build in areas that frankly do NOT need to be subsidized to be developed, while simultaneously crying poor every year come budget time.
I urge YOU Peter, to do research on TIFS - http://www.chicagoreader.com/tifarchive/
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NOBODY would develop Wilson Yard right now!!!!!
Developments are stalled in better areas than Uptown.
Instead of wasting your time fighting progress why not work to improve your community.
By the weakness of your argument I can conclude you probably voted for Obama. Obama plans on spending billions of tax dollars on less profitable projects than this.
Why not support a development which will bring more money, business, and clean up an ugly area?
The sad thing is that you don't realize how wrong/stupid you are!
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Great Comments!
Messick,
TIFs simply encourage development in areas that over wise won't get it. Nobody would be developing Wilson Yard right now if it wasn't for TIFs.
TIFs really do help the community.
Is there waste? OF COURSE.......it's the government. Whenever the government gets money it wastes some of it. However, in my opinion TIFs are one of the few government sponsored programs that actual spend money effectively.
New Developments bring work, money, business, and improved appearance to neighborhoods. They are a WONDERFUL tool.
In the long run TIFs actually bring more tax revenue to the city.
I live in Uptown. I'm looking forward to the development. Target is better than a vacant lot.
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Concentrating another 300 people in a Cabrini Green style housing complex will only exacerbate issues that are already prevelant in the area. And, I think it important to read the reasons for the lawsuit. Including but not limited to..
- $400,000 - the average cost per unit for this housing
- 34% - The amount of TIF money used for this project. City guidelines stipulate no more than 20% of the cost should be TIF money
- HUGE changes to the original plan. Please reference www.fixwilsonyard.org for a true insight into what has happened
- The IF/THEN concept.
- And, as a resident in Uptown, I would rather see this space sit vacant for a year or two until the market picksup than be burdened with a disaster for the next 40 years if this is allowed to be built.
AND most importanly, and Alderman, in Shiller, that has refused to meet community residents and has violated open meetings laws.
This is a disaster in the making. I wish the lawsuit all the luck in the world!
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What exactly is stupid about questioning the use of TIFS? Why do so many of the people who have left comments here believe that TIF funds are money from heaven? The funds are coming from tax payers like you and me, and being handed to developers to entice them to build, many developments in such blighted areas as Lincoln Park. Again, DO THE RESEARCH on TIFS - http://www.chicagoreader.com/tifarchive/
Let me lower myself to your level of intelligence and call you out for being stupid, as you obviously have not done due diligence with regard to what and how TIFS are used within the city of Chicago.
RJ Williams comment has clearly delineated the problem with the use of TIF funds in this particular instance.
Great leap in logic to make the assumption that I voted for Obama Bob W. Unfortunately, there is ZERO basis in what I wrote to substantiate your invalid argument. I suggest you utilize a local community college that offers a class in basic Logic.
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@Bob W - Sadly you are probably right that nobody would develop Wilson Yard right now in the economic climate. Then again, if the alderman had not sat on this project for so long waiting for her chosen developer to get his hands on it, and the property was sold at auction to any willing and able developer say 5-10 years ago, we wouldn't be in this mess right now, would we? And we are trying to improve our community. Uptown social service agencies are already struggling to keep up with the demand for services from the crush of low income and dependent individuals in the area, add this many new units of low-no income housing is not going to help that situation. All we want is a return to the original community backed plan of mixed income housing. Not mixed as is low, very low, and no income.
@ Jessica - we all would like to see a Target in Uptown, but we also want to see the movie theater that was part of the approved plan, and the mixed income housing that was promised. This plan has changed substantially since it was first presented and the community of uptown has been left out of the process. we love the diversity of uptown, the cultural mix that it provides. This is about revitalizing Uptown and being able to sustain the lower income population that we are already dealing with, not exacerbating the problem with a new influx of low income residents, with no additional social service assistance for them.
@ RJ Williams - I couldn't agree more with everything you stated.
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The Wilson Yard TIF is emblematic of this corrupt and cynical system, so I for one am very happy that this lawsuit is happening.
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TIF abuse is a huge problem in Chicago, but it is not limited to the Wilson Yard TIF district. Look at the LaSalle TIF district, which took in $7 million in its first year before any TIF redevelopment activity was even undertaken. Clearly, the area is not blighted. Wilson Yard, on the other hand, is a vacant lot in a relatively run-down section of Uptown. So why not sue the City over that one?
That isn't a rhetorical question. The parties suing the City are motivated by narrow self-interest. Those who oppose the Wilson Yard redevelopment consist mainly of recently arrived, upper-middle income residents who knew the kind of neighborhood they were buying in but now want it to change to suit their tastes. Their attitude towards people of less means is nothing short of hostile. The people who would be living in the rental housing would not be unemployed "gangbangers", as has been suggested by supporters of the lawsuit, but ordinary working families. A "low-income" household earns around $40,000 a year, while very-low is around $30,000. These are not people living off the public dole, and it is disingenous for anyone to suggest otherwise. Basically, opponents of the redevelopment simply don't want to deal with working-class people. They would prefer boutiques and cafes to affordable housing that is actually still badly needed in this city. Such self-centered individuals should have never moved into the neighborhood to begin with.
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LaSalle TIF District is not in our front yard, this is, and therefore we are suing over the TIF district that effects us the most. LaSalle TIF District residents can follow our lead if they like and I wouldn't doubt that there will be more lawsuits like this moving forward.
Our narrow self interest is the health, welfare and survival of the community in which we live and of those who will be living in this project. We want mixed income housing on this site, and the Target store and everything else that was promised when the project was approved for TIF funding. We want this project to be a model of mixed income housing for all of Chicago not another failure for Uptown and a trap for low income families.
We want the law to be upheld and the taxpayers dollars allocated within confines of the legal limits which govern TIF districts
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There are real issues involving real residents and real money. That, MaxJPUsa is the crux of the lawsuit.
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Jessica Smith
Do you really believe the fairy tale that TIFs spur economic growth? Then you need to read the reports by two Illinois professors “TIF Districts Hinder Growth” and “The Effects of Tax Increment Financing on Economic Development” by Dye and Merriman. They basically found “TIF incentives might actually be counterproductive” and “The implementation of TIF districts caused a slower rate of property value growth.” Here’s a blog with more information. http://ivvoice.blogspot.com/2006/05/are-tif-districts-bad-for-our.html
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