To the Editor:
Rather than “Clearing the air on Harper Court” (Dec. 11), University of Chicago Vice President for Civic Engagement Derek Douglas’s letter about the financing of the Harper Court development obscures the level of public investment provided for the project. Douglas says, “The promise of $17.5 million in new real estate taxes generated by the new development allowed the developer to obtain financing critical to the project.” It sounds like Douglas needs a refresher on how a Tax Increment Financing (TIF) district works.
Douglas states correctly that TIF assistance for the project included direct investment of $2 million from money already in the TIF fund and additional financing to be repaid from future tax revenues for a total of $20.04 million (he does not mention the $3.4 million grant of city-owned land to the project). The way the TIF works is that the city provides that financing through bonds to be paid from future tax revenues. So not only are 20 million tax dollars NOT used for schools and city services, they are also not available for anything else within the TIF district. And if the TIF goes bankrupt (for example, if the university claims exemption from property taxes), the taxpayers are still liable for that $20 million.
Thus, the developer received $20 million from the TIF as well as additional financing from private investors, whom it presumably paid off when the university bought the property for $98 million. The university now owns the property, the private investors have their return and the developer turns its profit. The only investors who have not yet been made whole are the taxpayers (through the TIF district), who not only never get their initial $2 million back but who will need to pay the remaining $18 million over the next 11 years in the form of all the property taxes collected on Harper Court as well as an additional $750,000 each year from the rest of the TIF district.
Douglas speaks proudly of the university’s choice not to claim a tax exemption for Harper Court, but the redevelopment agreement depended upon diverting those Harper Court tax revenues. Presumably after 2024 there may be some tax revenue available for things like schools, though Douglas’s letter implies that the university may choose to claim its tax exemption at that point. Rather than extolling its benevolence to the community, the university would do better to acknowledge the enormous public subsidy it received in its latest real estate deal.
(Figures taken from the Staff Report to the Community Development Commission about the Harper Court Project: www.cityofchicago.org/city/en/depts/dcd/supp_info/tif/53rd_street_tif_.html)