On the face of it, Mayor Brandon Johnson’s proposal to float up to $1.25 billion in bonds for housing and economic development makes financial sense.
The mayor has seized on an idea hatched in the Lori Lightfoot administration to use a coming increase in revenue from the expiration of dozens of tax increment financing districts around the city to back bonds that would give the city access to that cash now instead of waiting for the gradual expiration of those TIFs. Part of the argument for taking on the debt tied to this initiative is that the city, like other local governments, is facing a significant revenue decline soon as federal pandemic assistance runs its course.
Adding to the initiative’s appeal: Unlike the ill-thought-out Bring Chicago Home program, which voters rejected in the March 19 primary, there’s no commensurate tax increase to pay for it. These are existing property tax revenues being moved from one bucket (TIF) to another (the city’s general fund). The bonds would restrict these funds to designated uses — affordable housing and economic development in city neighborhoods, particularly those that most need it.
This is a plan worthy of serious consideration by the City Council.
So why are we queasy?
The Johnson team’s struggles to manage implementation of both the ideas on which it campaigned and the sorts of problems with which every mayor is confronted have created a crisis of confidence in the mayor’s office for a substantial number of aldermen, the business community and, most importantly, the public. The Progressive Caucus of the City Council recognized as much in its usefully self-aware statement last Monday following the Bring Chicago Home defeat, saying its members understood the loss reflected distrust in the powers that be at City Hall.
So the bond ordinance, which is meant in large part to retain and build new affordable housing critical to alleviating growing housing insecurity in Chicago, represents a useful opportunity for the mayor and his progressive council allies to show by deeds, not just words, that they will adjust accordingly in the face of intense public skepticism.
What does that mean in practical terms? For starters, it entails soliciting the opinions of experts in the fields of finance and real estate development on how to make these bond proceeds go as far as possible. This initiative will be a failure if the public dollars aren’t combined with substantial private investment to leverage them by two or three times.
To that end, we urge Ald. Pat Dowell, 3rd, chair of the City Council Finance Committee, to hold another hearing before proceeding. The initial hearing on March 22 took place on a Friday afternoon, not typically a time of the week conducive to close attention to arcane financial matters, and featured administration officials and voices with personal stakes in the ordinance’s approval. Another hearing tapping the knowledge of those expert in leveraging public and private dollars and putting together deals with more than a few layers of financing would promote confidence that the city is being more thoughtful than it’s showed since Johnson took office.
Demonstrating the mayor and his allies understand the voters’ message also means being more transparent and willing to subject themselves to reasonable scrutiny from aldermen not on board the progressive train. Johnson didn’t help his cause by burying 34th Ward Ald. Bill Conway’s proposed ordinance to require City Council approval of expenditures of more than $1 million from the $250 million in unspent federal pandemic cash as of the end of 2023. That ordinance, which more than half the council co-sponsored, remains in the Rules Committee — familiarly the place where legislation goes to die.
There’s room for debate over whether $1 million is too low of a threshold to trigger a council approval requirement. But a council role in overseeing major project expenditures both from the pandemic cash and these bonds clearly is reasonable and would help promote sorely needed public confidence. TIF projects get that level of council scrutiny, which is indispensable for measuring the success of those projects over the short and long terms.
While other cities have used this bonding mechanism for housing and economic development, Chicago has focused to date almost exclusively on TIF. There are limitations to TIF, which is a useful tool but is confined to projects within designated districts. TIF accounts in parts of the city that are growing are far more flush than those in the most disadvantaged parts of Chicago. Reallocating some of that cash as TIF districts expire so that it can be invested in areas most in need makes perfect sense.
An underappreciated risk to bond financing and the ensuing large bucket of money — and $1.25 billion, to be spent in increments of $250 million annually over five years, is a lot — is that the investments become too dispersed so that their impact within specific communities is relatively minimal. Another hearing could feature those who can speak to the virtues of focusing on a handful of neighborhoods and seeing whether more concentrated investment results in changes residents feel, experience and notice.
New Planning and Development Commissioner Ciere Boatright, an excellent appointee by the mayor, knows firsthand how such focus can benefit a neighborhood, having overseen Chicago Neighborhood Initiatives’ highly touted revitalization of the Pullman neighborhood on the Far South Side.
Another way Team Johnson could reassure skeptics would be to reduce the size of the bonding authority at first. That would reassure the public the bonds are doing what supporters say they will. If the approach is successful, it will be a financing tool to which the city will return — in the same way TIF has become a time-honored economic development tool.
We’ve said this before at times of trial for the Johnson administration, but there’s a chance with this bond ordinance for the mayor to change the narrative that he doesn’t know the difference between campaigning and governing — and that he has no interest in reaching out to those beyond his progressive base. To do that, he will need to be open to more give and take than he’s shown so far in his tenure.
With this bond ordinance, Johnson’s council critics are open to engaging. The business community seems open to doing so as well. Here’s an opportunity to show the public the city that works can in fact work.
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