Committee on Finance

Context: at least once a year, the comptroller must advertise for bids from “national and state banks and federal and state savings and loan associations seeking to be designated as municipal depositories” for the payment of interest upon the funds of the City & the Board of Ed.

According to municipal code, this subject matter hearing must be held annually

A few months back, the Inspector General’s office released an audit that found that this process of designating municipal depositories “does not evaluate whether the banks provide inclusive and equitable financial services throughout Chicago.” https://igchicago.org/2021/08/31/oig-finds-that-the-citys-process-for-designating-municipal-depositories-does-not-ensure-designation-of-banks-that-provide-equitable-lending-and-banking-services-throughout-chicago/

From the report: “It is imperative that the City evaluate the practices of banks that profit from holding public dollars, and ensure that the biases that have historically plagued communities of color aren’t continuing with discriminatory and predatory lending practices.”

More on this from @CityBureau and @WBEZ: https://interactive.wbez.org/2020/banking/disparity/

The committee is chaired by @ward32chicago Alder Scott Waguespack & vice chaired by @5thWardChicago Alder Leslie Hairston. It has 33 other members. You can watch the live-steam here: https://livestream.com/accounts/28669066

We have a quorum. There is one public speaker, the executive director of an association whose name I didn’t catch. He speaks to property tax assessments and says Cook Co. Assessor Fritz Kaegi has “targeted” the business community across Chicago with his assessments

Melissa Conyears-Ervin @ChiTreasurer kicks things off. She says the treasurer has not traditionally been part of this municipal depository selection process but “if we want different results we have to do different things” to increase equity in mortgage lending.

“Our office has conducted direct outreach to nearly 50 banks and by the way, thank you to the aldermen that provided contacts for us to reach out to the local banks within your wards,” Conyears-Ervin says.

Unfortunately they still did not receive responses from many smaller banks, as they’d hoped. Education could be key. “We’ve discussed inviting the smaller banks in for a discussion with us so we can truly understand what the hesitation [to apply to be a municipal depository] is”

This year, banks were asked to submit a number of new things like the mortgages that were denied & the racial breakdown of those denials, as well as the locations of their branches in the city (since many larger banks have been shuttering locations in Black & brown neighborhoods)

That concludes Conyears-Ervin’s piece. Next to speak is Comptroller Reshma Soni.

She goes over the RFP process. She says in September the Department of Finance and the Treasurer’s Office contacted 48 banking institutions to inform them that the RFP (request for proposals) had been issued.

Next is Horacio Mendez, president & CEO of the @WoodstockInst. He commends efforts to increase the number of smaller depository institutions. He says the process of applying to be a depository can be too complex

He says there should be a program or city agency (or contract with nonprofits) to provide technical assistance to banks that are hesitant to apply.

Next is Anthony Simpkins, president and CEO of Neighborhood Housing Services of Chicago, which works with residents “to make the dream of homeownership a reality.”

He speaks to the retail mortgage lending data that NHS examined. It shows that “alarming disparities persist in bank mortgage lending in Chicago between white neighborhoods and Black and brown neighborhoods.”

In terms of mortgage application denial rates, based on 2019 data, Black mortgage applicants are denied more often, even when adjusting for factors like income and credit. Black refinancing applicants are denied 2x more

Latino refinancing applicants are also denied more often than white applicants

“Neighborhoods like Austin and Englewood are losing homeowners” and losing population as a result–losing patrons that shop at businesses, losing children who attend schools

Simpkins says Latino families are at a higher risk of housing insecurity and displacement because of higher rents, and are being denied the wealth-building potential of homeownership. Says homeownership can be cheaper than renting

That concludes Simpkins’ report. Now Ben Jackson, VP of government relations at the Illinois Bankers Association @ilbanker is supposed to speak but is having technical difficulties

We move on to Ald. Osterman @48Ward who says it’s great that this equity conversation is happening. Commends the Treasurer for her work on this issue and says we can’t expect this to change “overnight” but that it’s important to have transparency with “our partners, the banks”

Osterman mentions that @chicagosmayor announced a tax credit lending initiative yesterday for primarily communities of color https://chicago.suntimes.com/city-hall/2021/12/6/22819109/affordable-housing-tax-credits-low-income-vacant-lot-chicago-south-west-sides-pilsen-lightfoot

@AldermanLaSpata says he hopes we see further analysis of the lending data. The data has to be made presentable, accessible and understandable not only to City Council but also to constituents.

He asks the banks present on the hearing today to respond to this data which showed unequal lending practices.

Ben Jackson from the Bankers Association is on now and, addressing La Spata’s point, says the folks representing banks on the call today “aren’t necessarily specialists in that area”

Jackson says all the banks that applied for the RFP are doing their best to improve. He says they’re working on diversifying their executive suites and boards.

Waguespack says a link was sent out to the municipal depositories RFP and within that, there are PDFs of respondents’ responses about home purchase lends by census tract, residential lending for the year 2020, detailed info for the alders to peruse.

LaSpata rephrases his question: “I won’t deny that the data is extensive and useful. The challenge of course is the analysis of the data.” He looked at the data and “unless you have a staff person who understands GIS” it is hard to get a meaningful analysis out of it

He wants the banking representatives present to answer the question “Do you feel the analysis [presented by Woodstock] is reflective of your lending in Chicago and if so what are the corrective actions that you’re looking to take as a bank?”

Waguespack asks La Spata to pick one bank. LaSpata picks JP Morgan Chase.

The JP Morgan Chase rep, Jeffrey Sundheimer, says he can’t speak to the data. But he can speak to actions.

Sundheimer says they’re working to increase homeownership, expand affordable rental housing, increase supplier diversity and improve access to banking. He can follow up with La Spata and others after the committee.

3rd Ward Alder Pat Dowell asks Mendez if any consideration is being given to the appraisal companies that work in these neighborhoods and how they appraise and the impact that has on the decisions these financial institutions are making

Mendez says the Woodstock Institute is having these conversations and has a committee focused on appraising. Says you need to marry on-the-ground community expertise like NHS has, with the policy/research side like at Woodstock, and the experiences of the banks

25th Ward Ald. Sigcho-Lopez says community banks are hurt during financial crises. “Money is not trickling, loans are not trickling, to the people who need them most: small businesses and Black and brown homeowners… Do we have any data around community banks?”

Comptroller Soni says the data they have is for the 11 banks that responded to the RFP, which are larger banks

Sigcho-Lopez asks then how can they incentivize those smaller banks to apply?

Soni reiterates that one of their goals is to streamline the application process, as well as to hear firsthand from the smaller banks what is holding them back.

Ald. David Moore now asks, what is equity to the bankers’ association rep Ben Jackson & to the Chase representative?

Jackson dodges the question, saying individual banks have worked with community groups to understand equity…

Moore says that when the rep had earlier referenced diversity in the executive suites of banks, that is indeed a problem; you need Black leadership in banks, we don’t just need more “community engagement”

Sundheimer from JP Morgan Chase again asks that they return to this outside of committee. But he adds that they have a fellowship initiative for women of color that was introduced in 2014 in Chicago and now has about 60 fellows.

Conyears-Ervin says Ald. Moore’s question is a great one. This has to start at the top: “where is the equity, where is the diversity in the C-suites?”

Jackson says a lot of information-sharing is happening, including rounds of discussion, they’re working on analyzing that input

Ald. Moore says when you have organizations such as in Englewood, residents associations like RAGE, or in Auburn Gresham, different realtors and community residents, those community members at the grassroots level have to work with those Black leaders at the bank.

Apparently this concludes the hearing on municipal depositories? I was expecting more from the reps of the banks who were present.

Now the Committee will discuss R2021-1302, which calls for “hearing(s) on impact of property tax distribution on commercial corridors and economic recovery.” Its chief sponsor is 30th Ward Alder Ariel Reboyras and it’s co-sponsored by a slew of mostly conservative alders.

The resolution says that businesses across the county “pay a disproportionate share of property tax levies” and calls out Cook County Assessor Fritz Kaegi, who is present, for his “grossly inaccurate” COVID-19 property tax adjustment to residential properties.

@fritz4assessor @assessorcook starts things off. He says that the 2019 assessments in the northern suburbs of Cook County met IAAO standards for accuracy and equity. “Fair assessments are the first step to ensure no one pays more than their fair share in property taxes.”

Kaegi says Reboyras’ resolution mis-states several things and that it could result in Chicago residents actually paying more in property taxes. https://t.co/7Ri1DBGV4K

He says some commercial property tax bills like the ones focused on in the resolution are increasing because they’re based on more accurate assessments.

https://twitter.com/AssessorCook/status/1468275211963273217?s=20

“To engage in favoritism” by reducing commercial property tax assessments beyond what’s legal would cost homeowners, he says

Reboyras responds. He says he wrote the resolution “because of the calls that we’re getting.” He says large commercial building owners are expecting higher assessments in 2022, is that correct?

Kaegi says that’s correct. He again says @CrainsChicago found that the assessments of these buildings were accurate; if anything they were on the conservative side

43rd Ward Ald. Smith says “when we seek fairness, that is always the hardest thing…” and that she appreciates Kaegi’s “refreshing” work.

But she does want to ask about land-banking vacant storefronts, what she calls a persistent problem over the years.

She asks Kaegi to speak to changes to that system that would encourage landlords to rent their buildings.

Kaegi says that yes, the past policies of his office incentivized this kind of “stashing.”

He says he grew up on the south side and it pains him to see these corridors like on 71st street so vacant

I don’t quite understand his answer regarding credits and vacancies, to be honest.

Ald. Moore says he doesn’t understand either. Asks Kaegi to repeat and go slow.

Kaegi says previously the practice would have been to estimate the income of a property on that corridor and if it was 100% occupied, his office would assume a low level of vacancy…

What he’s doing now is estimating the vacancy rate on that corridor, and then apply that to every commercial property on the corridor in estimating its income.

Now there are half-credits if a property owner claims an additional level of vacancy (?)

Smith says they’ve already seen some results and are “very, very happy,” this is “creating movement in the market…A few of our vacant storefronts magically have tenants now.”

Back to commercial and residential property tax assessments, Kaegi concludes: “When it comes to assessments, we’re all interconnected…we’re all splitting up this pie that no one wants to eat.”

Making big buildings be valued more fairly will reduce homeowners and small businesses’ share of the overall pie, he says.

34th Ward Ald. Carrie Austin says some small businesses in her ward want to testify about their experiences, there should be another hearing, but they “fear retribution from the assessor,” so maybe they could testify anonymously

Austin is rocking this fur hat indoors https://t.co/n2eXbEbysS

Kaegi says “we don’t look at every commercial property as the same…we realize the incredible diversity in size and in neighborhood…we’d love to come out to your communities and speak to your local chambers” to address their specific issues

Kaegi says that hardly anyone actually understands this assessment system, so they want to educate more.

“People aren’t used to the assessor as someone who wants to get things right,” he jokingly laments, but that is his goal.

Ald. Michael Rodriguez says he appreciates Kaegi’s leadership and efforts to be accurate, fair and equitable.

He asks about 3rd-party independent analysis of the assessor’s office. In 2018 one analysis had found it to be inequitable, but now we have another association “giving you the gold medal” for achieving accuracy..how did they go about achieving that standard?

Kaegi says the first thing is to make sure you’ve got good people doing this work. They have good technology, a data science team to do modeling to look for anomalies and disparities. The models are online “so everyone can kick the tires” and see how they’re doing

Rodriguez says he still has homeowners come into his office who are being over-assessed, but that Kaegi’s office has been good at working with them on those issues. How can this be more systemic though?

Rodriguez also calls out elected officials who didn’t want seniors to be able to automatically re-certify for their benefits each year, said it was “perverse” and implied that the electeds wanted to keep the seniors dependent on their offices for help

Automatic renewal of the senior exemption was passed in 2019 and “we’re really proud of that,” Kaegi says.

“We think transparency is really important for accountability,” Kaegi says, and that’s why they show their maps

Rodriguez says he believes Kaegi has been a model of transparency and best practices

Ald. Sigcho-Lopez asks Assessor Kaegi about gentrifying areas and speculation, what are some things that the Council can do to protect homeowners in rapidly gentrifying communities?

Kaegi says that “Our policies have the most benefits [for those in gentrifying areas] because if everyone is assessed fairly then they’re not having to carry more of the tax burden than they should.”

Kaegi also says we need progressive solutions to help shoulder the burden of funding schools than just property taxes

“I think we should be funding schools more with income taxes than property taxes…that reduces the burden on everyone.”

The Committee on Finance adjourns at 12:40pm. Thanks for following along with #ChiDocumenters and check out http://documenters.org for full notes later on from this and other local meetings