The IGO provided this report to ensure that the research and implementation efforts already expended by City departments and personnel are not lost should the City consider implementing this system in the future.

[1] City of Portland, “City of Portland Launches CivicApps Design Contest,” March 17, 2010, accessed February 29, 2012, http://www.civicapps.org/press/city-portland-launches-civicapps-design-contest.  

The initiative highlighted on this page was identified and researched by students from Northwestern University as part of a course that was a collaboration between Northwestern University School of Continuing Studies and the IGO. This research was done by Phil Boardman, Peter Contos, and Bryan Weber, Winter Quarter 2012. For a full transcript of their research please contact instructor Donald Gordon at donald-gordon@northwestern.edu.

• Fiscal Year Expenditures, which provides transaction-level detail on the expenditures made by the state. Such information is formatted in a searchable database that can target spending down to accounts such as “Board & Lodging.”
• Current Fiscal Year Budget, which includes a pie chart that details each agency’s percent of the state’s overall appropriation, as well as definitions of the different funds that provides resources to each agency.
• Source of State Funds, which shows the dollars received by the state, the source of dollars, and a historical comparison using bar graphs.
• School and Local Budgets, which uses a color-coded county map to include budgetary data from local governments and school systems across the state
• University of Nebraska Spending, which includes funding and expenditure data from the four main campuses of Nebraska’s state-sponsored university.  

The initiative highlighted on this page was identified and researched by students from Northwestern University as part of a course that was a collaboration between Northwestern University School of Continuing Studies and the IGO.  This research was done by Kaasha Benjamin, Alex Katz, Peter O’Neill, and Kyra Weiss, Winter Quarter 2012. For a full transcript of their research please contact instructor Donald Gordon at donald-gordon@northwestern.edu.

The initiative highlighted on this page was identified and researched by students from Northwestern University as part of a course that was a collaboration between Northwestern University School of Continuing Studies and the IGO. This research was done by Karen Badawi, Brandon DeLallo, and Matt Marcus, Winter Quarter 2012.  For a full transcript of their research please contact instructor Donald Gordon at donald-gordon@northwestern.edu.

• Visit the Icelandic Constitutional Council’s website here.

[1] Haroon Siddique, “Mob rule: Iceland crowdsources its next constitution,” The Guardian, June 9, 2011, accessed February 29, 2012, http://www.guardian.co.uk/world/2011/jun/09/iceland-crowdsourcing-constitution-facebook  

The initiative highlighted on this page was identified and researched by students from Northwestern University as part of a course that was a collaboration between Northwestern University School of Continuing Studies and the IGO. This research was done by Greg Andrus, Shawn Mahoney, and Ethan Gillani, Winter Quarter 2012.  For a full transcript of their research please contact instructor Donald Gordon at donald-gordon@northwestern.edu.

City law mandates that the Quarterly include certain statistics about the number, type, and duration of IGO investigations, as well as summaries of concluded investigations resulting in disciplinary findings and recommendations. In order to further promote transparency of IGO efforts and accountability in City operations, the Quarterly also includes summaries of IGO audits, program reviews, and recommendations it published during the prior three month period.

“We take the same approach with our Quarterly Reports as we do with all other IGO undertakings,” said Inspector General Joe Ferguson. “There can be no accountability without transparency, and no transparency without public access to the work of the City. These Quarterly Reports are meant to provide that access, and I hope they are useful to City residents and employees, and illuminating for City leadership.”

Highlights from IGO administrative and criminal investigations include:

1) The IGO found that a Department of Aviation (CDA) security officer assigned to O’Hare International Airport submitted a forged law enforcement certificate when he/she submitted his/her job application. The investigation showed that the employee attended the required training for the position, but failed the certification examination three times. The employee was terminated.

2) An IGO investigation determined that a very successful Minority-Owned Business Enterprise (MBE) certified vendor was allowed to remain certified for at least one year more than it was entitled when a Senior Compliance Officer, who has since been laid off, failed to properly evaluate the vendor’s average gross annual receipts. This mistake, which the IGO had identified several instances of in the past, likely denied truly economically disadvantaged companies legitimate opportunities to compete for contracts that ultimately, and mistakenly, went to that vendor.

3) The IGO found that a City employee had repeatedly falsified his/her work records in order to operate a side business painting houses while on City time. The employee was terminated and his/her supervisor reprimanded for failing to track the employee’s work activities.

4) In the final sentencing of the long standing joint IGO-federal corruption investigation code-named Operation Crooked Code, Dominick Owens, of Chicago, was sentenced to one year and one day in prison after having been found guilty of two counts of bribery on March 29, 2012. Owens, 45, had faced a maximum penalty of 10 years in prison and a $250,000 fine for each count.

In November 2011, Owens was found guilty of accepting two separate bribes of $600 in July 2006 in exchange for certificates of occupancy at four residential properties while working as a zoning inspector for the City. He will report to prison on June 13, 2012.

Operation Crooked Code, launched in 2007 between IGO, U.S. Postal Inspection Service, the Federal Bureau of Investigation, and the U.S. Attorney’s Office, has resulted in the convictions of 22 people, including 16 current or former City employees.

5) On February 14, City contractors Elizabeth Perino, owner of Perdel Contracting Company and Accurate Steel Installers, and Anthony Capello, owner of Diamond Coring, were charged in federal court for allegedly using companies under their control to fraudulently obtain government contracts set-aside for owners of M/WBE firms.

The charges stemmed from a joint IGO/federal/state investigation.

Perino was charged with fraudulently using her companies as sham pass through sub-contractors as part of a scheme to help prime contractors meet the City of Chicago and other local governments’ set-aside requirements for construction contracts. She allegedly acted as a sham pass-through on contracts with Prime Contractor A, a construction firm with billions of dollars worth of government and private contracts, as well as with the owner of Prime Contractor B, who was cooperating with law enforcement.

Capello was charged with one count of mail fraud in a criminal information filed in Federal Court. He allegedly obtained contracts worth more than $2.3 million between 1999 and 2006 from the City of Chicago, Cook County and the State of Illinois, by operating the Stealth Group, Inc., also known as SGI, as a fraudulently certified WBE and DBE. He will be arraigned at a later date in U.S. District Court.

“These investigations run the gamut; from bribery to residency violations, theft of City time, improper use of City resources, and incompetence. My hope is that City managers can use this Report, as well as other public IGO products, to improve their operations and ensure greater integrity in City government,” said Inspector General Joe Ferguson.

The Inspector General’s Office has conducted an analysis of property taxes billed to property owners in Special Service Area (SSA) taxing districts that overlap with Tax Increment Financing (TIF) districts.[1]  The analysis found that over 80% of SSAs overlapped with TIF districts in 2010 and 2011 and SSA taxpayers contributed approximately $7 million to TIF districts each year due to the SSA tax rates applied to their properties’ incremental EAVs.[2] The data and calculations supporting the analysis are available in the files posted on the right side of this page and a printer-friendly version of this analysis is available here.

When property owners pay an SSA tax[3]—an extra tax rate voluntarily implemented for the purpose of funding supplemental neighborhood services—for an SSA that overlaps with a TIF district, the additional SSA rate requires them to also pay additional taxes to the overlapping TIF district.  This is not inappropriate or unique to SSAs; an increase in any taxing district’s tax rate generally results in increased taxes paid into overlapping TIFs.[4]

An SSA is an economic development tool that enables an area’s residents and business owners to raise property taxes to fund services such as sidewalk maintenance, landscaping, security, and local business advertising provided by an appointed Service Provider Agency.  An SSA, like any taxing district,[5] annually requests a tax levy, expressed in dollars.  The request is submitted to and must be approved through an ordinance passed by the City Council.  The resulting levy is then filed with the Cook County Clerk.  The Clerk determines the tax rate by factoring the requested levy against the district properties’ Equalized Assessed Value (EAV) available for taxation by the SSA.[6]  The tax rates vary amongst SSAs, and vary from year to year as long as the rates do not exceed the SSA district’s tax rate ceiling.  In 2011 the SSA tax rates ranged from 0.15% to 3.00%.[7] There were 42 SSAs in Chicago that year and their aggregate tax levies were nearly $20 million.[8]

TIF districts are established by the City and are designed to counter blight by encouraging economic development.  Like SSAs, TIFs are funded by property taxes but the mechanics of taxation is different.  When a TIF is created, the properties’ existing EAVs at the date the TIF is approved are recorded as a “base” EAV.  The base EAV stays the same each year, and taxes levied on the base EAV are collected by the taxing districts.  But any future increase in the EAV creates a new “incremental” tax base.  The taxing districts’ rates are applied to the incremental EAV as well as the base EAV, but the tax dollars generated from the incremental EAV are collected by the TIF.  TIFs do not have tax levies.  Rather, as a result of a TIF, the total property taxes paid are divided between the taxing districts and the TIF fund, with collection against the base going to the taxing district and the collection on the incremental EAV going to the TIF, which uses the funds for certain development projects and other eligible costs.  In 2011 there were 165 TIF districts in Chicago, which received approximately $510 million in property tax revenue.[9]

When SSAs and TIF districts overlap, it can create an unintended benefit for the TIF because while the SSA tax is extended on the base EAV at a rate sufficient to meet the levy (within the legal maximum rate), it is also extended on the incremental EAV reserved for the benefit of the TIF, thereby resulting in an increase in TIF revenues. For example, SSA #51 (Chatham), which was established in 2011, is approximately situated along Cottage Grove Avenue from 75^th Street to 95^th Street on the southeast side of the City.  Some of the SSA #51 properties are also in one of three overlapping TIF districts: the 87^th Street / Cottage Grove Avenue TIF, the Stony Island / Burnside TIF, and the 95^th / Stony Island TIF.

In 2011 the SSA #51 Service Provider Agency, the Chatham Business Association, budgeted to provide security patrols, street cleaning, façade improvement, advertising and administrative expenses such as personnel salaries and office rent.  The City Council approved a tax levy for SSA #51 of $996,000, the estimated cost of the services.  The Cook County Clerk determined the tax rate needed to generate the $996,000 by dividing the levy into the base EAV of all the properties in the SSA.  In 2011, the County determined that the required rate was 1.409%.[10]

But because some of the SSA properties are also in TIF districts, they have a base EAV and an increment EAV.  Any assigned tax rate taxes both the base and the increment EAV.  According to Cook County tax records, SSA #51 property owners were billed a total of $1,625,924 as a result of the SSA tax rate: $996,317 to the SSA and an additional $629,607 to three the TIF districts from the 1.409% SSA rate applied to the increment EAV of each TIF.  The SSA tax rate, revenue and distribution were as follows:

SSA #51 – Chatham

Source: 2010 Cook County Tax Agency Report for Agency 03-0210-150, 2010 Cook County TIF Distribution report, and 2010 Office of the County Clerk Listing of Tax Codes by Agency report

SSA #51 taxpayers were billed $996,317 for the SSA (1.409% of the base EAV of $70,710,961) and $629,607 for the SSA rate on the TIFs’ increment EAVs (1.409% of the combined TIF incremental EAVs of $44,684,693).

In another example, taxpayers of SSA #16 (Greektown) were billed$494,230 in taxes to fund an SSA tax levy of $119,112 in 2011, with the remaining $375,118 owed to the TIF as a result of applying the SSA tax rate to the incremental EAV.  In other words, of the total tax billed to meet the SSA levy, less than 25% went to the SSA, and more than 75% was owed to the TIF.

The IGO’s analysis used Cook County tax records for the past two tax years to calculate how much in additional taxes were owed to TIFs due to the SSA tax rates.  The analysis found that over 80% of SSAs overlap with TIF districts.  Furthermore, SSA taxpayers contribute approximately $7 million into TIFs each year due to the SSA rates applied to their properties’ increment EAVs.

This information is presented here in a chart that lists each SSA’s tax rate, the SSA tax extension, and the additional distribution to the TIF(s).

The audit reviewed DFSS’ policies and procedures for managing grants made to delegate agencies. The audit focused on procedures in place during 2010 and found that despite some deficiencies, DFSS’ grant monitoring processes were generally effective. The IGO findings included:

1) Lack of timely follow-up on DFSS Fiscal Monitoring Unit findings. The IGO found that DFSS failed to follow-up with the Safer Foundation regarding DFSS audit findings and corrective action requested from the agency in September 2010. Following IGO audit inquiries, the Safer Foundation responded to DFSS’s findings in January 2012.

2) Voided expenses charged to a grant program. The IGO found that checks made payable by the Cara Program to vendors were never cashed and were subsequently voided. The voids occurred after the program was closed out and the payments had already been charged to the program. Therefore, the grant money was never reimbursed to DFSS. DFSS agreed that such voided expenses should be credited back to the grant, and reissued a policy memorandum and scheduled future training regarding how delegate agencies should comply with closing grant funded programs.

3) Insufficient segregation of financial duties coupled with a lack of bank reconciliation created an opportunity for funds to be misused at the American Indian Center. A DFSS Fiscal Monitoring Unit report had noted seven months of no bank reconciliations but did not note the insufficient segregation of duties. A single staff member at the Center was responsible for preparing deposits, reconciling bank accounts, making deposits, and safeguarding the checks and signature plates. This same staff member was later arrested and convicted felony financial crimes, theft, and forgery charges after stealing more than $60,000 by writing more than 150 checks to himself.

DFSS disagreed with an IGO finding regarding how the department treated a DFSS Fiscal Monitoring Unit report regarding Cares Chicago.

The DFSS Fiscal Monitoring Unit issued a report for Cares Chicago, which received grant funds from the Workforce Investment Act. The report stated there were no “audit findings” at Cares Chicago, though the report included six issues listed as “management recommendations”. The IGO found that three of the six recommendations were significant and believed these should have been considered findings, which would have required agency response and a corrective action plan; in turn this would have triggered further follow-up by DFSS. DFSS disagreed with the finding, and noted that DFSS’ “fiscal monitoring scope mirrors the scope used by our funding sources on the federal and state levels and by the City-Wide Single Auditors.”

“DFSS is the City’s gatekeeper for hundreds of millions of dollars in social service funding for Chicago residents,” said Inspector General Joe Ferguson. “This audit was intended to identify any weaknesses in fiscal monitoring and controls so that the City can be a better steward of federal and state grant dollars. I thank Commissioner Diaz and her staff for their time and assistance, and hope this audit assists their operations in the future.”

Approximately 95%, or $467,606,701, of the DFSS 2010 budget appropriation consisted of grant funds.

In November 2011, Dominick Owens, of Chicago, was found guilty of accepting two separate bribes of $600 in July 2006 in exchange for certificates of occupancy at four residential properties while working as a zoning inspector for the City. Owens, 45, had faced a maximum penalty of 10 years in prison and a $250,000 fine for each count. He will report to prison on June 13, 2012.

In one instance, a cooperating witness asked Owens for two certificates of occupancy for properties located at 6109 N Wolcott and 3713 South Wallace. On July 10, 2006, Owens entered a request in a City database for an occupancy inspection at the two addresses and then marked those same requests as “completed” in the system 12 minutes later. Then, under surveillance, the cooperating witness passed Owens $600 in cash.

This is the final sentencing of a long standing federal corruption investigation code-named Operation Crooked Code. The cooperative effort, launched in 2007 between the City’s Inspector General Office, U.S. Postal Inspection Service, the Federal Bureau of Investigation, and the U.S. Attorney’s Office, has resulted in the convictions of 22 people, including 16 current or former City employees.

“Operation Crooked Code was a resoundingly successful local-federal partnership,” said Inspector General Joe Ferguson. “Together, these agencies successfully brought to justice City employees who had violated the public trust. We also provided a strong lesson to those who might corruptly use their official positions for personal gain – should someone seek to game the system in the future, they should expect an equally vigorous and coordinated response. I look forward to continuing the longstanding and productive partnership we share with our Operation Crooked Code partners.”

The government was represented by AUSAs Steven Grimes and Christopher Hotaling in front of U.S. District Court Judge Blanche Manning.