TIFs in the Spotlight: After School Matters

Chicago’s inspector general finds that the charity founded by Da Ex-Mare’s wife got $915,000 in money donated by recipients of tax increment financing, through an opaque process that generated $3.7 million for various public and private organizations.

The Trib and Crain’s have good writeups on the city inspector general’s look into “public benefits” clauses in TIF contracts. In short, the city required a handful of TIF recipients, through an opaque process, to donate money to the After School Matters charity and its KidStart sibling—founded by Mayor Daley’s wife—among other causes. The report is a good—well, resonantly inconclusive—look at how the sausage gets made:

The IGO’s interviews of current and former City employees involved in TIF negotiations revealed a clear lack of accountability in the TIF program. The senior-level City employees interviewed by the IGO each reported that the terms of public benefits clauses are set after collective negotiations with developers, aldermen, and representatives of DHED and the Mayor’s Office, but the employees interviewed could not identify specifically who determines which charities are included in the public benefits clauses. TIF recipients, on the other hand, overwhelmingly reported that the selection of private charities to which they must donate as a condition of receiving TIF subsidies is made unilaterally by the City. They likewise had no knowledge of the underlying City participants or procedures through which those charities were designated. It is clear that no City employee or division within DHED claims ownership of the negotiation process or ultimate responsibility for the final RDA, much less the public benefits clause.

City employees further reported that that the City has no established guidelines or governing principles for the selection of charities included in the City’s public benefits agreements. Given the specific statutory requirements for all TIF subsidies and persistent transparency concerns surrounding the TIF program, policies and procedures for the selection of non-profits that receive reciprocating corporate charitable donations are critically important.

As the report suggests, this is hardly the first time a function of the city’s tax increment finance program has come under fire for both a lack of accountability. For instance:

But there was some unfinished business lost in the [Republic Windows and Doors] workers’ celebration—the little matter of the $10.4 million in public money Republic received from the city in 1996 and 2000 in exchange for promising to keep 610 workers on the payroll through 2019.

About that $10.4 million…

She confirmed that the five pages we’d received through our FOIA request were the only records the department had on Republic’s compliance with its TIF agreement. She couldn’t say why the city didn’t have annual reports for more than half the years the company was supposed to submit them. “They were required [to submit them] but our files only contain these documents that we provided to you,” she wrote.

The IGO ran into a similar problem: “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.” (That’s “leading” in terms of number of donations, not in total money donated.)

After School Matters is getting all the press attention, but there are many other recipients. Some seem perfectly sensible (requiring the Spertus Insitute provide one free day of access per week), some I doubt people will complain about (public schools and parks), and some are mildly controversial, as the IGO suggests in a footnote:

Moreover, other beneficiaries named in the public benefits clause included other recipients with Daley ties—the U.S. Conference of Mayors, a national organization that Mayor Daley chaired in recent years, and University of Illinois-Chicago Library Foundation, supporting the Richard J. Daley Library.

Italics theirs. Yes, it’s national, but in my experience the U.S. Conference of Mayors produces useful research, and “recent years” is pushing it a bit; Daley was president in 1996-97, a decade before the USCM got its $125,000. Whether or not After School Matters is a worthy charity is well dealt with by Deanna Isaacs in the Reader, and the report she addresses, “After School Programs for High School Students: Launching the Evaluation of After School Matters,” though it’s worth keeping in mind that the scientific evaluation of afterschool programs is very much in its infancy. And ASM has positive effects besides its mission to educate students, like employing artists and passing on grants to worthy (to me, at least) recipients like the Joffrey, Chicago Opera Theater, and the National Museum of Mexican Art.

The damn thing about it is that it’s really not all that much money. According to the IGO’s figures, ASM got $915,000 out of $3.7 million in TIF public benefits over 24 years. As Greg Hinz points out, the city itself has given $54.5 million to ASM in the past seven years. According to its 2009 Form 990, ASM’s revenue that year was over $23 million. And as a result of this comparatively small revenue stream—the equivalent of 1.7 percent of what the city’s given ASM—there’s a mess. I’m never surprised when questionable dealings like this occur, but I’m regularly surprised at how little they’re over.

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