Audit of the City’s Compliance with the TIF Sunshine Ordinance and TIF Surplus Executive Order

The Office of Inspector General (OIG) conducted an audit of the City’s compliance with the Tax Increment Financing (TIF) Sunshine Ordinance and the TIF Surplus Executive Order. The audit had two objectives:

  1. To determine if the Department of Planning and Development (DPD) is meeting the requirements of the TIF Sunshine Ordinance, Municipal Code of Chicago § 2-45-155, which requires the City to make certain data related to TIF projects and districts publicly available.
  2. To determine if DPD and the Office of Budget and Management (OBM) comply with Executive Order 2013-3, Declaration of TIF Surplus Funds in TIF Eligible Areas, which requires the City to annually declare at least 25% of the City’s unallocated TIF balance as “surplus” to be remitted to taxing bodies affected by TIF.

OIG concluded that the City does not provide the public with all of the data required by the TIF Sunshine Ordinance. We also concluded that the City declared a TIF surplus in accordance with the Executive Order in 2020, but limited the amount to be considered for surplus declaration. This limitation was a result of recording errors, a lack of consistency in reviewing projects, and the allowance of stagnant unspent funds.

DPD does not provide the public with all of the data required by the TIF Sunshine Ordinance. The City hosts three separate websites that contain publicly available data on TIF projects and districts. These include the Citywide TIF Map and Project Locations website, which was substantially updated over the course of the audit. However, none of the websites contain all the data required by the ordinance. Items such as sustainability requirements and economic disclosure statements are still missing for many projects. 

Regarding surplus declaration, in 2020, the City declared a TIF surplus in compliance with the TIF Surplus Executive Order. There is room for improvement, however. The City limited the amount of funds to be considered for surplus declaration because of budgetary recording errors, lack of project close-out review, and unspent infrastructure funds. Additionally, because the City’s timeline for vetting TIF projects can vary significantly, some funds are held year over year for projects that may not be executed.

OIG recommends that DPD upload the missing items required by the TIF Sunshine Ordinance and make all TIF data available on a single website, develop a reliable system for managing project progress and documentation, and ensure that staff responsible for uploading data have access to the system. OIG also recommends that OBM and DPD regularly review planned TIF expenses with the requesting departments and consider developing a deadline system to prevent funding for anticipated projects from being withheld indefinitely. Finally, OIG recommends that OBM and DPD develop guidelines for what expenses may be considered project commitments, and that the departments release an annual TIF surplus statement describing in detail how the City calculates a surplus, and identifying the districts that provided the surplus funds.

In response to our audit findings and recommendations, DPD stated that it has uploaded many of the missing records and plans to conduct quarterly audits of the required documents. The Department also began efforts to create a centralized website and will address the need for automated information uploads during the design. Additionally, DPD relaunched its internal project management system, allowing data and documents to automatically upload to the Open Data Portal in the interim. OBM agreed to create guidelines related to the categorization of projects and to develop an annual report providing information on TIF surplus calculations and the sources of surplus. OBM stated that, in 2022, there will be four additional TIF positions, which will allow the City to perform a thorough analysis of all proposed and current TIF projects. Finally, OBM will establish quarterly reviews of proposed and obligated projects.