$1.3B in public TIF money for Lincoln Yards violates state law, claims lawsuit

While last week’s City Council approval represented the final legislative vote for Lincoln Yards, the battle over the controversial $6 billion North Branch megadevelopment is still heating up. This week, a coalition of activists led by the Grassroots Collaborative and Raise Your Hand for Illinois Public Education filed a 58-page lawsuit with the Cook County Circuit Court against Sterling Bay’s 55-acre project.

The lawsuit claims that the $1.3 billion in tax increment financing (TIF) approved by the city violates state laws which require new TIF districts to demonstrate that an area is blighted and that redevelopment would not happen without TIF money—a concept known as the “but-for” test. The plaintiffs also argue that the TIF deal is in violation of state civil rights laws because it widens inequality along racial lines.

“The lawsuit challenges the city’s racially and ethnically discriminatory administration of the TIF system which has disproportionately benefited areas in majority-white census tracts to the detriment of areas in majority-African American and majority-Hispanic census tracts,” said the Grassroots Collaborative in a statement.

The 168-acre Cortland/Chicago River TIF district for Lincoln Yards would essentially freeze real estate taxes on the vacant land at their current levels and use incremental tax revenue generated by the new development to reimburse Sterling Bay for fronting the cost of infrastructure improvements. These include three new bridges over the Chicago River, an extension of the 606 trail, river wall repairs, and a realignment of the Elston-Armitage-Ashland intersection.

It’s still unclear how the legal challenge may impact the project’s tentative timeline. The plaintiffs are asking the judge in the case to freeze city spending on Lincoln Yards as the lawsuit runs its course, lawyer Aneel Chablani told the Chicago Tribune.

Sterling Bay was looking to begin construction on Lincoln Yards phase one—a cluster of office buildings next to the C.H. Robinson HQ—soon after earning city approval. The developer also planned to start work on new green space at the site’s south end, starting with youth sports fields that could be in use as early this summer.

Sterling Bay

If successful, the lawsuit could have wide-reaching implications beyond Lincoln Yards. “The complaint filed this morning is a systemic challenge to Chicago’s administration of the TIF system,” said Chablani in a statement. “It challenges not only the creation of the Cortland and Chicago River TIF district, but the manner in which Chicago uses the TIF system to benefit areas of the city not intended by the statute and by doing so negatively affects low-income communities of color and the very neighborhoods that were intended to be aided through the use of TIF funds.”

Chicago Mayor-elect Lori Lightfoot pledged to reexamine Chicago’s TIF practices when she takes office on May 20. The incoming politician asked the city’s Committee on Finance to postpone the Lincoln Yards TIF vote earlier this month but ultimately backed the measure after negotiating a larger commitment from Sterling Bay to employ minority- and women-owned construction firms on the project.

“We have confirmed that the city has additional controls over these projects, which I am confident will allow for us to further improve these deals and to bring community voices into the process going forward,” said Lightfoot in a statement on April 9.