Like the Marshall Plan following WWII, which was a successful American initiative to help restore the war-ravaged Western European economies, Paul Vallas is proposing an equally aggressive plan to address the inequities and lack of opportunities in our long-neglected neighborhoods. For decades, political discourse about Chicago embodying a “Tale of Two Cities” formed around a visually growing disparity between the city’s communities. The empirical data supports this claim without any dispute. Many of Chicago’s citizens live in depression-like conditions in their communities. Only 15% to 20% of our city thrives.
This is a massive failure for our neighborhoods. It is also a massive failure for our business community, a community that needs a platform to grow beyond the four to ten wards where they currently base their activities, leaving forty wards with limited opportunity or no opportunities at all.
Today, Paul Vallas announces that this will change when he is elected mayor in 2019. He outlines how he will create conditions that will stimulate $10 billion in capital investment on new projects. These projects are specifically targeted to aid the economically challenged communities of our city.
To put this into perspective, the construction costs of a Willis Tower equivalent ranges between $750 million and $1 billion. This program will encompass the equivalent scope of building between ten to thirteen Willis Tower projects in our most neglected neighborhoods. This will occur in Vallas’ first term.
“This $10 billion of investment will be initiated in my first term as Mayor and, if it doesn’t happen, you can hold me fully accountable,” Vallas said. “This investment will be the start of a transformative process that is going to reinvigorate our communities most in need and be a catalyst for my turn-around agenda.”
Vallas continued, “I call this plan the ‘Put Up or Shut Up Plan,’ because that is the urgency that a Vallas City Hall will conduct itself when addressing these critical issues. From Day One of my administration, this plan will deliver the answers our economically challenged communities are asking for. City Hall fails to take advantage of federal programs. They are all talk and no action, but their time is up. When I am elected mayor, it will be the time for action.”
Why Action Needs to Occur NOW
The incentives from this federal investment program are at their highest for only three years, after which, the program becomes far less attractive. This window creates a sense of urgency for these investments to take place.
Paul Vallas commented on why City Hall hasn’t done anything before with this program, “We have not heard anything from Chicago’s current leadership, or from the other candidates on this program for various reasons. One reason is that Chicago has incredibly partisan leadership, unwilling to work with Washington D.C. This is a mistake. City Hall refuses to take advantage of this program for political reasons, when there are programs that could benefit our city.”
“I won’t make that mistake. I am running for Mayor of Chicago, not Mayor of Springfield or Washington D.C. As Chicago’s Mayor, I will work with whomever can help address the needs of our citizens and neighborhoods. If that means leveraging programs from D.C. or Springfield, that is what I will do, no matter what side of the aisle the programs originate. City Hall won’t do it now, so they will when I am mayor. They are going to put up or shut up.”
How the Plan Will Operate
In the 2017 Tax Cuts and Jobs Act, Congress included a program that holds massive potential for spurring real investment in economically challenged communities around America. The program is called the Opportunity Fund, or the Qualified Opportunity Zone Program.
This bipartisan program provides massive tax benefits to investors that invest in designated, economically-challenged areas throughout the U.S. Chicago has designated 133 zones that are approved in the national program, out of a total of about 8,700 zones nationwide. Investors around the country are very excited for this program. It is designed so that the federal government provides all the attractive incentives, not the states or our city.
Chicago’s Potential for Success Utilizing Federal Opportunity Zones
Chicago possesses great potential for this program. With a growing core downtown, a vast public transportation system, and 133 designated zones for investors to consider, there is a wealth of opportunity for our city under this program. An issue we face is that our 133 zones in Chicago currently compete for investor money and subsequent projects against the other 8,700 zones in the U.S. That said, we have something that is much more valuable that we can commit to make sure that this program produces $10 billion of new investment in my first term as Mayor.
We have a bloated Tax Increment Financing (TIF) fund that has grown massively under Mayor Emanuel, up to $660 million in 2017. However, the TIF fund has not been used effectively to invest in our most challenged areas.
Those days are over when Paul Vallas is elected. They are over from Day One of a Vallas Administration.
“I am committing that for the three years coinciding with the Federal Opportunity Fund Program, I will allocate $1 billion of TIF funds to dominate nationwide, private sector investment in our 133 economically-challenged zones,” Vallas declared.
“I am going to make this $1 billion TIF investment in a fully transparent way. There will be no favorites played and 100% of that $1 billion will go into projects in the 133 designated economically-challenged zones,” Vallas continued. “I am going to commit these funds in a way that will stimulate $10 billion of total new investment in challenged areas in my first term. I guarantee it.”
Vallas will implement this structure in a way in which the city will lend this money to these new projects and receive preferred equity, so that the city will be repaid in full for its $1 billion, with a return on those funds. The city will also have more security on our investment than the monies invested by the private investors.
By leveraging out underutilized and reprioritized TIF monies in a way that we can take limited risk and be paid back our money with interest, this project will succeed. It will have a dramatic impact on our neighborhoods, just like the Federal TARP had for our banking system during the 2008 financial crisis.
Our city will make money from this program through the preferred equity structure and through the growth in our tax base when the new projects are completed.
Vallas will also direct funding from the Neighborhood Opportunity Program to support development in the zones. This additional funding will finance job training and other business assistance grants that will address financing needs potentially covered by the Opportunity Zone investments.
Federal Workforce Innovation Opportunity Act (WIOA) funding will also be directed to fund job training. Funding in the form of the Federal Workers Tax Credits (WTC) and Illinois EDGE Program will be secured to provide financial incentives to zone businesses for new and local hires. The WIOA and WTC Program targets the training and hiring of high school dropouts, chronically unemployed, ex-offenders, and veterans.
“Neighborhoods in need of immediate action and investment will be the biggest beneficiaries of my plan for Federal Opportunity Zones,” Vallas said. “They have waited far too long, with political lip-service ranging over many decades. But my plan is on its way.”
The Business Community & Labor Groups
In a close second to the neighborhoods, Chicago’s business community and labor groups will benefit from the “Put Up or Shut Up Plan.” Currently, business and labor are entirely constrained as the forty underdeveloped wards are not in areas that attract investment or new projects, especially in a city losing more population than any other big city in America. By taking bold action, we will expand our footprint. Labor and business will have more opportunities from which they can work and expand.
Let’s be reminded that the City and State committed $2.25 billion in incentives to the Amazon HQ2 bid, with over 600 business, civic, and community leaders who came together to enthusiastically endorse that project.
Vallas expects an equal level of enthusiastic support from those 600 leaders for a program that will guarantee much greater investment in our communities that are most in need. The media have been asking candidates for specifics, and the neighborhoods demand that we quit talking, and that we put up or shut up.