Racial Equity Group Slams TIFs And Tax Subsidies For Lincoln Yards And The 78

Lincoln Yards rendering
A rendering of Lincoln Yards. The group Chicago United for Equity has issued a report denouncing the tax increment finance districts and the combined $2.4 billion in tax subsidies for megadevelopments Lincoln Yards and The 78. Provided courtesy of Sterling Bay
Lincoln Yards rendering
A rendering of Lincoln Yards. The group Chicago United for Equity has issued a report denouncing the tax increment finance districts and the combined $2.4 billion in tax subsidies for megadevelopments Lincoln Yards and The 78. Provided courtesy of Sterling Bay

Racial Equity Group Slams TIFs And Tax Subsidies For Lincoln Yards And The 78

A group focused on racial equity says Chicago should rethink $2.4 billion in taxpayer subsidies approved for two massive new neighborhoods, Lincoln Yards and The 78.

In a report released this week, Chicago United for Equity (CUE) called the controversial tax increment finance districts, or TIFs, set up for the two megadevelopments a “bad deal for Chicago” that will end up disproportionately burdening communities of color.

“It’s not too late to change some of these decisions,” said Niketa Brar, executive director of CUE. The group’s “racial equity impact assessment” measured costs and benefits of the two mega-TIFs, particularly to communities of color.

Chicago’s City Council approved the two controversial TIF districts in the final days of former Mayor Rahm Emanuel’s administration.

Most of the $2.4 billion in TIF subsidies are slated to pay for new infrastructure in the two areas, which are largely vacant. Both Lincoln Yards, which straddles the North Branch of the Chicago River, and The 78, in the South Loop, border some of the wealthiest neighborhoods in the city.

CUE’s report said subsidies to these areas are “indefensible” given the pandemic and the city’s budget hole.

To “prevent further harm to the most impacted communities,” the group recommends “pausing” all infrastructure work in Lincoln Yards and The 78 that hasn’t begun yet, and says the city should exercise its authority to re-negotiate the TIF agreements there.

The group also called for policies to address residential and commercial displacement in nearby communities, and it says the relocation of General Iron from the area around Lincoln Yards to the Southeast Side should be stopped.

The report blasts Chicago’s approach to planning and development, saying the city needs a “paradigm shift.” Development should be driven by the community’s vision, not developers, said Brar. “If [developers] can’t respond to what we are asking for, then they should not actually be receiving taxpayer subsidized investments.”

Many of the report’s main ideas echo arguments made in prior debates around the megadevelopments and their TIFs.

The report finds Lincoln Yards and The 78 “don’t need TIF or other public subsidy to entice development: TIF expenditures like these are intended to attract private capital and kickstart development where it otherwise wouldn’t occur.” TIFs in Chicago generally “perpetuate racial inequities through over-investment in white communities,” the report finds.

Brar noted $200 million in TIF subsidies slated for three bridges in the Lincoln Yards area. “That $200 million is the same amount that the entire Invest South/ West initiative received for 10 neighborhoods in Chicago,” Brar said. “This is about scale, about deals, about investments and about being really thoughtful about how the city of Chicago spends our money.”

There are more than 140 TIF districts in Chicago. In all, those districts capture one-third of property tax revenue generated in the city, money that is not put into the general revenue stream or municipal budgeting process.

All new tax revenues generated in the high-end megadevelopment TIFs will remain inside those TIF boundaries for 23 years, potentially depriving public agencies of significant revenue and shifting tax burdens to taxpayers outside the TIFs, the study finds.

The report sought feedback from Chicagoans most likely to face direct impacts from the two megaprojects, including people at risk of having their homes or businesses displaced.

For its part, Lincoln Yards developer Sterling Bay took issue with many of the report’s assertions, writing in an email that TIF funds “create critical public infrastructure in an unconnected part of the city while generating new jobs for all Chicagoans and new, much-needed revenue streams for the city. Now more than ever, we do not think Chicago can afford to squander this once-in-a-lifetime opportunity for growth and economic advancement.”

Linda Lutton covers Chicago neighborhoods for WBEZ. Follow her @lindalutton.