Aldermen hold hearing on Johnson’s $1.25B bond plan for affordable housing

Mayor Brandon Johnson’s administration held a hearing Friday on his ambitious $1.25 billion bond plan to fund affordable housing and development that saw some aldermen welcome the idea while others bristled over a lack of specifics on how their wards would be affected.

The mayor rolled out the five-year, $1.25 billion borrowing proposal in February as a vehicle to provide $250 million per year through 2028 for projects helmed by the city’s housing and planning departments. The money — which Johnson has pitched as much needed cash, as the city faces “significant shrinkage” in revenues those departments typically rely on — would go toward a slate of progressive housing and economic development initiatives, funded in part by winding down reliance on tax increment financing, or TIF, districts.

Initially stuck in a holding pattern in a different committee, the borrowing plan was easily moved to the council’s Finance Committee in a 29-7 vote this month. At a Friday subject matter hearing, aldermen pressed officials on details while sharing their thoughts on the controversial history of TIFs in the city. The committee did not vote on the plan, but will do so at a subsequent meeting that has not yet been scheduled.

At stake for aldermen are the expiration of TIF districts, which are currently used to help fund private redevelopment projects as well as voter-friendly fix-ups of roads, park facilities and schools.

These special districts capture any increase in property taxes resulting from fresh development and lock that new money away in a special fund that can be spent by the city on economic development projects within that district’s geographic boundaries. Johnson’s plan would borrow against the new property tax revenues that are freed up after a TIF’s scheduled expiration. Which TIFs would expire is a key unanswered question, since some aldermen might want to use the money to extend or expand on projects in their ward’s TIFs.

Several shared reservations about whether Johnson’s plans would pay off. Budget chair Ald. Jason Ervin, 28th, challenged city officials to do more calculations on the net return of the bond proposal, including growth of the sales tax base.

“Ultimately, if you make this investment, we should see some return on the investment beyond just buildings,” Ervin said. “So if there is the possibility of additional revenue that’s going to come from these investments, then I think we need to have some idea of where that comes from because that makes the pill easier to swallow.”

Ervin also called for “better clarity” on which projects benefiting from the bond funds would be subject to aldermanic approval — always a sticking point for the often-territorial 50-member City Council. His calls were echoed by Ald. Walter Burnett, who praised the plan but also drew chuckles from colleagues when he noted his “generous” 27th Ward carries much of the city’s TIF slush fund and should reap the benefits.

“This is a very unique and creative way of front-loading particular development and economic development in the city of Chicago,” Burnett, Johnson’s vice mayor, said.

Ald. Anthony Beale, 9th, was more pointed when advocating for his Far South Side ward. He got into a back-and-forth with Department of Planning and Development Commissioner Ciere Boatright over concerns regarding lack of City Council oversight.

“The departments are going to be picking which projects are going to be funded, correct?” Beale, a Johnson opponent, said. “So, again, give me the confidence that a project in my ward’s going to be recommended.”

Boatright responded that the administration works “closely” with aldermen and, “I think that it’s fair to say we would, you know, be very careful and strategic to ensure that we’re investing in our communities in a way that’s creating jobs.”

In their presentation, city officials pitched the deal as a means to shore up new revenue without raising property taxes — a red line that Johnson drew during his mayoral campaign — and during a critical time in which federal stimulus funds that buoyed affordable housing and development projects are fast dwindling.

The shift would require the city to raise its property tax levy to capture new values, which city officials said will not raise tax bills for individuals. If the city didn’t raise its levy to capture that new value, however, property tax rates would drop.

“Today, as we stand on the precipice of a new era, we once again see ourselves at a crossroads,” said Department of Housing Commissioner Lissette Castañeda. “With the launch of this bond, we are not just addressing a statistic. We are taking concrete steps toward creating a city that is inclusive, equitable and compassionate.”

The hearing came after a bruising week for Johnson’s progressive coalition that saw one of his most-championed causes, the Bring Chicago Home tax referendum, appear headed for defeat in Tuesday’s primary election. Unofficial results Friday showed voters were rejecting the ballot question to raise the real estate transfer tax to fund affordable housing and other services for the homeless, 53.6% to 46.4%, but mail-in ballots were still being counted.

At a news conference Wednesday, the mayor had shrugged off the apparent setback and paraded the $1.25 billion bond plan as his next battle: “So buckle up.”

The borrowing plan calls for $20 million to $30 million of the revenue raised to be used to address homelessness, including to preserve single-room occupancy units, or SROs, and to create new permanent supportive housing.

Mayoral critic Ald. Bill Conway, 34th, used the referendum’s likely defeat as an opportunity to pounce during Friday’s hearing on the bond plan.

“The message was not that Chicago is against affordable housing or doesn’t want to help the homeless. It was instead really a rejection of a ‘first we get the money’ mentality,” Conway said after mentioning Bring Chicago Home. “I have grave concern of a blanket authorization of this amount.”

Under the proposal, the city would pay off $2.4 billion in accumulated debt through 2061 by using property tax revenues that would become available thanks to expiring TIF districts.

Johnson’s plans for soon-to-expire districts would shift city spending priorities away from TIFs’ historic use — largely infrastructure and capital spending — toward investment in housing and direct support for businesses. In all, his team expects the plan would capture $150 million in new annual revenue over the next 10 years and $290 million over the next 15 years, which it can use to pay down other debts or fund other programs.