The Chicago City Council signed off on legislation that pushes two of Mayor Lori Lightfoot's signature infrastructure projects — the city's first casino and major rail transit line extension — further along on the path towards construction.
The council approved ordinances that establish a
The council also approved zoning changes that mark a milestone in the
The funds statutorily must go to help cover pension contributions, easing pressure on the city to meet rising payments.
"Big day for the city of Chicago. Big news on a major infrastructure front. Major news for economic development as our casino moves closer to reality," Lightfoot, who is seeking a second term in the February city election, said during a news conference after the council meeting Wednesday.
Both projects are promoted as economic boons for the thousands of jobs they will create and secondary development they will spur with the casino also considered central to the city's ability to structurally balance its books over the long term.
The Red Line extension will open up access to jobs and schools for far South Side residents who currently lack rail transportation, city and CTA officials say. The CTA is a sister agency of the city with the mayor controlling four of seven board appointments and the governor naming the three others.
"City Council took a major step forward in making our city a more equitable and modernized place to live. With approval of the new transit TIF district we finally have the funds to leverage and begin the Red Line extension project. This is 50 years in the making," Lightfoot said.
Lightfoot first pitched use of a transit TIF, the city's second, over the summer and it overcame reservations voiced by some council members about the diversion of revenue in communities far north of the TIF district to fund the track extension that won't directly benefit them.
CTA President Dorval Carter Jr. said Wednesday he would begin applying for federal funds early next year and is aiming for inclusion in President Biden's 2024 budget that will be released later next year. A design-build contract will be entered into next year.
The CTA will apply for $2.2 billion in Federal Transit Administration New Starts funding and will seek additional grants available under other federal allocations such as the Congestion Mitigation and Air Quality Improvement Program, and Transportation Infrastructure Finance and Innovation Act loans.
Remaining holes in the financing could be covered by CTA borrowing. The CTA will leverage the TIF revenue but has not yet outlined the security backing for the borrowing. Chicago Chief Financial Officer Jennie Huang Bennett said the city is not on the hook for any liability related to the TIF revenue or potential future borrowing.
"Since this is a competitive process to leverage federal funds, the establishment of the TIF district shows a local commitment and should help with the application. The loss of potential property tax revenues to the city is a cost but not an overwhelming one," said Howard Cure, director of municipal bond research at Evercore Wealth Management LLC.
"I think any initiative to expand service into underserved communities is an overall credit positive for the city as it should make commuting to jobs easier and quicker and is a help to communities that are reliant on cheap sources of transportation for people that may not have the luxury of working from home," Cure said.
While the transit agency pursues federal capital help, it also may also turn to D.C. for additional operational support to manage a fiscal cliff that looms in 2026 when the three local transit agencies face a more than $700 million collective budget gap after federal COVID-19 pandemic relief is exhausted.
"I do think the federal government needs to step up and look at how we can get past this in a combined effort" given it's a widespread strain for transit agencies across the country, Illinois Gov. J.B. Pritzker said Wednesday.
Cure said while the casino will provide new revenue once up and running the city should proceed cautiously because gambling receipts can fluctuate based on competing venues and gambling carries social costs that must be factored into the equation.
The $1.7 billion project is also projected to generate $200 million in annual funding for the state's $45 billion multi-year capital plan. Local governments would receive another $25 million.
The Chicago Plan Commission previously signed off on the casino and the City Council Wednesday approved the zoning changes that allow Bally's to construct its permanent casino on a site just west of downtown. Before that is open Bally's will set up a temporary casino at another downtown site.
A final hurdle remains in the Illinois Gaming Board's required review.
