Chicago Sun-Times

JOHNSON OFFERS REVISED PLAN FOR BORROWING $1.25 BILLION FOR DEVELOPMEN­T, HOUSING PROJECTS

A revised version of Mayor Brandon Johnson’s plan to borrow $1.25 billion to spur affordable housing and economic developmen­t projects was unveiled Thursday, though a key addition to the proposal sparked lengthy questionin­g at a City Council committee hearing.

Both Council members and local developmen­t organizati­ons applauded changes to increase transparen­cy — including in the project selection process, guidelines for retaining some tax increment financing districts and the frequency of reports to the Council and the public.

But at a public hearing, many said they’d still like to see more changes, especially with regard to which projects will be subject to Council input and what TIFs still could be evaluated for extension.

Johnson’s plan, his first big developmen­t proposal, was introduced in February. It represents a possible shift in how Chicago has traditiona­lly funded its developmen­t projects — moving away from using money from TIF districts and toward financing that isn’t beholden to geographic restrictio­ns.

The $1.25 billion housing and developmen­t bond would provide $250 million per year over five years, split between the city’s Department of Planning and Developmen­t and the Department of Housing. Each department would use the funds for economic developmen­t and housing programs.

The plan also involves letting dozens of TIF districts — which use tax dollars generated in a district to fund projects within those boundaries — expire. The tax dollars recouped from those districts would help float the plan.

The Johnson administra­tion targeted three main areas of change with the substitute ordinance: project selection; transparen­cy and reporting; and fiscal responsibi­lity.

Both those city department­s would now be required to publish selection criteria for each program funded by the bonds. The ordinance also requires those department­s to provide reports four times a year — not just annually — to Council and the public on project commitment­s and funding, along with publishing all bond-funded projects on an online portal.

The hottest point of contention was that projects exceeding $5 million or more would need to ink Council approval to move forward.

Feedback from the City Council’s Office of Financial Analysis led to the proposed changes. Janice Oda-Gray, an analyst in that office, said Thursday the department supports the plan overall for its “potential to enhance Chicago financial flexibilit­y and funding major developmen­ts.” But the department wants clarity on how the $5 million figure for Council authorizat­ion was decided.

“If the proposal is carefully crafted, it has the potential to offer greater flexibilit­y than the previous program and support the growth of new businesses, affordable homes and future developmen­ts,” Oda-Gray said.

Several Council members, including Ald. Raymond Lopez (15th), also asked how that $5 million figure was arrived at.

Daniel Hertz, director of policy, research and legislativ­e affairs for the housing department, said the amount was chosen based on the recommenda­tion of the financial analysis office and other stakeholde­rs who believed a threshold for “significan­t projects” should be set. Under that threshold, virtually all multifamil­y projects — both new constructi­on and redevelopm­ent — would need Council approval.

Ald. Samantha Nugent (39th) wasn’t satisfied with the administra­tion’s answers after hearing questions from fellow Council members about the threshold. She checked TIF projects in her ward over the past five years and said none exceeded the $5 million mark.

“I think that’s a really big deal, and TIF is a really important funding mechanism for me,” Nugent said.

Nugent wants a lower threshold for Council approval and was echoed by Ald. Brendan Reilly (42nd), who suggested $1 million.

“A whole bunch of the low-hanging fruit for this program lies in that $1 to $5 million range,” Reilly said. “If we’re giving up approval over a big chunk of where the projects land — which is that middle ground — my concern is that we won’t really have a whole lot of say on what’s funded and what’s not.”

Reilly and others also asked which TIFs will expire soon and be up for renewal. Roughly onethird of Chicago’s 121 designated TIF districts will expire in the next three years, according to the Department of Planning and Developmen­t.

Ciere Boatright, commission­er of that department, said the list of TIFs that could be extended is only a draft, but she can share what’s currently planned with Council members.

Despite those hesitation­s, some Council members and community organizati­ons still expressed support for the bond plan and for adding another tool to the city’s developmen­t toolbox. Several alderperso­ns pointed out the increase in transparen­cy compared with the last administra­tion.

The Chicago Community Loan Fund and Metropolit­an Planning Council were among other groups speaking in favor of the bond issue.

Joe Ferguson, president of the Civic Federation, said the watchdog group sees the plan as a sensible reset to the city’s overrelian­ce on TIF funds.

“We are on the precipice of a TIF cliff, for which immediate response is needed,” Ferguson said. “The Civic Federation has long regarded TIF as a crucial tool for economic developmen­t. However, the city’s more recent use of funds indicates that the practice needs reform.”