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The Inspector General’s Office has conducted an analysis of property taxes billed to property owners in Special Service Area (SSA) taxing districts that overlap with Tax Increment Financing (TIF) districts.
The analysis found that over 80% of SSAs overlapped with TIF districts in 2010 and 2011 and SSA taxpayers contributed approximately $7 million to TIF districts each year due to the SSA tax rates applied to their properties’ incremental EAVs.[2] The data and calculations supporting the analysis are available in the files posted on the right side of this page and a printer-friendly version of this analysis is available here.
When property owners pay an SSA tax[3]—an extra tax rate voluntarily implemented for the purpose of funding supplemental neighborhood services—for an SSA that overlaps with a TIF district, the additional SSA rate requires them to also pay additional taxes to the overlapping TIF district. This is not inappropriate or unique to SSAs; an increase in any taxing district’s tax rate generally results in increased taxes paid into overlapping TIFs.[4] An SSA is an economic development tool that enables an area’s residents and business owners to raise property taxes to fund services such as sidewalk maintenance, landscaping, security, and local business advertising provided by an appointed Service Provider Agency.
An SSA, like any taxing district,[5] annually requests a tax levy, expressed in dollars. The request is submitted to and must be approved through an ordinance passed by the City Council. The resulting levy is then filed with the Cook County Clerk. The Clerk determines the tax rate by factoring the requested levy against the district properties’ Equalized Assessed Value (EAV) available for taxation by the SSA.[6] The tax rates vary amongst SSAs, and vary from year to year as long as the rates do not exceed the SSA district’s tax rate ceiling. In 2011 the SSA tax rates ranged from 0.15% to 3.00%.[7] There were 42 SSAs in Chicago that year and their aggregate tax levies were nearly $20 million.[8]
TIF districts are established by the City and are designed to counter blight by encouraging economic development. Like SSAs, TIFs are funded by property taxes but the mechanics of taxation is different. When a TIF is created, the properties’ existing EAVs at the date the TIF is approved are recorded as a “base” EAV. The base EAV stays the same each year, and taxes levied on the base EAV are collected by the taxing districts. But any future increase in the EAV creates a new “incremental” tax base. The taxing districts’ rates are applied to the incremental EAV as well as the base EAV, but the tax dollars generated from the incremental EAV are collected by the TIF. TIFs do not have tax levies. Rather, as a result of a TIF, the total property taxes paid are divided between the taxing districts and the TIF fund, with collection against the base going to the taxing district and the collection on the incremental EAV going to the TIF, which uses the funds for certain development projects and other eligible costs. In 2011 there were 165 TIF districts in Chicago, which received approximately $510 million in property tax revenue.[9]
When SSAs and TIF districts overlap, it can create an unintended benefit for the TIF because while the SSA tax is extended on the base EAV at a rate sufficient to meet the levy (within the legal maximum rate), it is also extended on the incremental EAV reserved for the benefit of the TIF, thereby resulting in an increase in TIF revenues. For example, SSA #51 (Chatham), which was established in 2011, is approximately situated along Cottage Grove Avenue from 75th Street to 95th Street on the southeast side of the City. Some of the SSA #51 properties are also in one of three overlapping TIF districts: the 87th Street / Cottage Grove Avenue TIF, the Stony Island / Burnside TIF, and the 95th / Stony Island TIF.
In 2011 the SSA #51 Service Provider Agency, the Chatham Business Association, budgeted to provide security patrols, street cleaning, façade improvement, advertising and administrative expenses such as personnel salaries and office rent. The City Council approved a tax levy for SSA #51 of $996,000, the estimated cost of the services. The Cook County Clerk determined the tax rate needed to generate the $996,000 by dividing the levy into the base EAV of all the properties in the SSA. In 2011, the County determined that the required rate was 1.409%.[10] But because some of the SSA properties are also in TIF districts, they have a base EAV and an increment EAV. Any assigned tax rate taxes both the base and the increment EAV. According to Cook County tax records, SSA #51 property owners were billed a total of $1,625,924 as a result of the SSA tax rate: $996,317 to the SSA and an additional $629,607 to three the TIF districts from the 1.409% SSA rate applied to the increment EAV of each TIF. The SSA tax rate, revenue and distribution were as follows: SSA #51 – Chatham
|
EAV |
SSA Tax Rate | Revenue | Distribution | |
| Base EAV |
$70,710,961 |
1.409% |
$996,317 |
SSA |
| Increment EAV – 87th/Cottage Grove |
$40,263,049 |
1.409% |
$567,306 |
TIF |
| Increment EAV – Stony Island/Burnside |
$4,392,327 |
1.409% |
$61,888 |
TIF |
| Increment EAV – 95th/Stony Island |
$29,317 |
1.409% |
$413 |
TIF |
Source: 2010 Cook County Tax Agency Report for Agency 03-0210-150, 2010 Cook County TIF Distribution report, and 2010 Office of the County Clerk Listing of Tax Codes by Agency report SSA #51 taxpayers were billed $996,317 for the SSA (1.409% of the base EAV of $70,710,961) and $629,607 for the SSA rate on the TIFs’ increment EAVs (1.409% of the combined TIF incremental EAVs of $44,684,693). In another example, taxpayers of SSA #16 (Greektown) were billed$494,230 in taxes to fund an SSA tax levy of $119,112 in 2011, with the remaining $375,118 owed to the TIF as a result of applying the SSA tax rate to the incremental EAV. In other words, of the total tax billed to meet the SSA levy, less than 25% went to the SSA, and more than 75% was owed to the TIF. OIG’s analysis used Cook County tax records for the past two tax years to calculate how much in additional taxes were owed to TIFs due to the SSA tax rates. The analysis found that over 80% of SSAs overlap with TIF districts. Furthermore, SSA taxpayers contribute approximately $7 million into TIFs each year due to the SSA rates applied to their properties’ increment EAVs. This information is presented here in a chart that lists each SSA’s tax rate, the SSA tax extension, and the additional distribution to the TIF(s).
| Special Service Area | 2009 Tax Year SSA Tax Rate 1 | 2009 Tax Year SSA Tax Extension 1 | 2009 Tax Year Additional Revenue to TIF 2 | 2010 Tax Year SSA Tax Rate 1 | 2010 Tax Year SSA Tax Extension 1 | 2010 Tax Year Additional Revenue to TIF 2 |
| SSA #1 State Street | 0.385% | $2,743,630 | $0 | 0.404% | $2,763,836 | $0 |
| SSA #2 Belmont-Central | 1.397% | $395,577 | $432,037 | 1.356% | $383,923 | $325,808 |
| SSA #3 63rd St. | 1.095% | $1,416,182 | $536,958 | 1.230% | $1,497,659 | $537,030 |
| SSA #4 95th St. | 0.809% | $85,892 | $112,058 | 0.809% | $85,848 | $103,770 |
| SSA #5 Commercial Ave. | 3.000% | $406,956 | $474,165 | 3.000% | $406,956 | $685,603 |
| SSA #7 Kedzie Tract Industrial | 0.000% | $0 | $0 | 0.306% | $50,055 | $9,450 |
| SSA #8 Lake View East | 0.272% | $749,525 | $0 | 0.311% | $817,542 | $0 |
| SSA #10 Back of the Yards Neighborhood Council | 1.869% | $432,538 | $861,085 | 1.866% | $431,716 | $750,813 |
| SSA #13 Stockyards | 0.922% | $694,089 | $707,937 | 0.887% | $1,198,600 | $925,166 |
| SSA #14 Marquette Park | 0.315% | $503,663 | $17,283 | 0.304% | $488,733 | $8,965 |
| SSA #16 Greektown | 1.000% | $119,112 | $409,757 | 1.000% | $119,112 | $375,118 |
| SSA #17 Central Lakeview | 0.147% | $493,956 | $0 | 0.159% | $503,574 | $0 |
| SSA #18 North Halsted | 0.337% | $371,120 | $0 | 0.443% | $473,985 | $0 |
| SSA #19 Howard St. | 0.714% | $228,457 | $154,041 | 0.791% | $240,098 | $174,125 |
| SSA #20 Western Ave. | 0.407% | $175,227 | $97,100 | 0.414% | $178,240 | $79,918 |
| SSA #21 Lincoln Square | 0.230% | $143,344 | $117,882 | 0.231% | $143,788 | $102,450 |
| SSA #22 Clark St. – Andersonville | 0.443% | $229,752 | $128,341 | 0.441% | $223,653 | $118,716 |
| SSA #23 Clark St. – Lincoln Park | 0.274% | $579,546 | $0 | 0.249% | $446,646 | $0 |
| SSA #24 Clark/Morse/Glenwood | 0.544% | $379,811 | $41,131 | 0.565% | $389,039 | $37,451 |
| SSA #25 Little Village | 0.346% | $399,212 | $12,964 | 0.372% | $413,349 | $12,941 |
| SSA #26 Broadway Commercial District | 0.358% | $333,274 | $176,751 | 0.431% | $385,143 | $199,149 |
| SSA #27 Lincoln/Belmont/Ashland | 0.131% | $471,673 | $19,834 | 0.162% | $564,097 | $23,679 |
| SSA #28 Six Corners | 0.461% | $216,649 | $144,850 | 0.466% | $216,897 | $130,403 |
| SSA #29 West Town | 0.254% | $411,009 | $19,560 | 0.244% | $376,518 | $17,323 |
| SSA #31 Clark-Lawrence | 0.221% | $310,804 | $232,339 | 0.207% | $286,526 | $194,178 |
| SSA #32 Auburn Gresham | 1.066% | $283,535 | $188,429 | 1.062% | $282,399 | $138,360 |
| SSA #33 Wicker Park-Bucktown | 0.148% | $661,953 | $16,400 | 0.270% | $1,136,154 | $28,422 |
| SSA #34 Uptown | 0.215% | $513,118 | $327,544 | 0.229% | $525,798 | $327,615 |
| SSA #35 Lincoln Ave. | 0.204% | $198,502 | $0 | 0.200% | $182,791 | $0 |
| SSA #38 Northcenter | 0.151% | $169,813 | $143,206 | 0.154% | $169,481 | $135,572 |
| SSA #39 Brighton/Archer | 0.971% | $846,239 | $15,494 | 1.049% | $886,096 | $12,070 |
| SSA #40 Michigan Ave. – Roseland | 1.287% | $223,514 | $116,720 | 1.434% | $216,759 | $122,987 |
| SSA #41 103rd St. – Roseland | 1.197% | $193,453 | $61,327 | 1.120% | $180,346 | $43,763 |
| SSA #42 71st St. – Stony | 1.281% | $502,136 | $539,140 | 1.298% | $506,045 | $468,951 |
| SSA #43 Devon Ave. | 0.387% | $179,671 | $185,974 | 0.397% | $184,093 | $166,971 |
| SSA #44 103rd Street – Beverly | 0.540% | $12,841 | $7,538 | 0.470% | $11,177 | $5,540 |
| SSA #45 103rd Street | 1.205% | $690,111 | $4,567 | 0.124% | $64,689 | $2,506 |
| SSA #46 119th Street (Terminated in February 2011) | 1.982% | $775,812 | $601,594 | NA | NA | NA |
| SSA #47 47th/Cottage Grove | 1.016% | $359,414 | $118,769 | 0.735% | $248,661 | $69,760 |
| SSA #48 Old Town | 0.215% | $169,961 | $0 | 0.229% | $169,840 | $0 |
| SSA #49 South Shore (New in 2011) | NA | NA | NA | 0.977% | $553,293 | $96,529 |
| SSA #50 Calumet Heights/Avalon (New in 2011) | NA | NA | NA | 0.995% | $507,341 | $465,327 |
| SSA #51 Chatham (New in 2011) | NA | NA | NA | 1.409% | $996,317 | $629,607 |
| SSA #52 51st Street (New in 2012) | NA | NA | NA | NA | NA | NA |
| SSA #54 Sheridan Road (New in 2012) | NA | NA | NA | NA | NA | NA |
| Total | $18,071,070 | $7,022,775 | $19,906,811 | $7,526,034 | ||
| 1 Source: Cook County “Tax Agency Report” for the 2010 and 2009 tax years | ||||||
| 2 Source: These figures were calculated by multiplying the increment equalized assessed value (EAV) of the TIF districts within each SSA by the SSA tax rate. The increment EAVs were derived from the Cook County “Tax increment Distribution Summary” for the 2010 and 2009 tax years. Excel versions of these summaries are included as separate worksheets in this workbook. In order to determine what portions of each TIF district were in each SSA, the tax codes for each SSA were compared to the tax codes for each TIF district. In those instances where a TIF has a negative value for Increment EAV (i.e., the properties’ EAV has decreased below the base EAV), no revenue is recorded to the TIF. For this reason, it is possible for an SSA that overlaps a TIF to generate no TIF revenue. However, there are no such instances for the SSAs listed above during the tax periods reviewed. All SSAs indicated above to have not generated revenue to the TIFs are outside of TIF districts for the tax years reviewed. The details of which tax codes are in each SSA are included in the 2009 and 2010 SSA Tax Codes and Rates worksheets in this workbook. | ||||||