By Joel Jacobs
Mayor Lori Lightfoot announced reforms to Chicago’s controversial Tax Increment Financing program (TIF) earlier this month, promising transparency and more oversight.
“For too long, the City’s TIF spending decisions have occurred in the shadows,” she stated in a press release.
The press release also included a statement from Deputy Mayor of Economic and Neighborhood Development Samir Mayekar. “Each year, the City receives hundreds of millions of dollars in property taxes through the TIF program – and residents deserve to know that their money is being used well.”
It took decades for the TIF program to evolve from an obscure tax law passed in the 1970s to what critics call a “slush fund” that rakes in hundreds of millions of dollars a year and sparks protests outside City Hall over developments such as Lincoln Yards on the North Side.
The TIF program is meant to spur development in “blighted” areas by declaring them TIF districts, which means that for the next 23 years, any increase in property tax revenue in that area goes into a TIF fund. This fund is set aside for development projects in that area — the logic being that new development will increase property values, generating TIF revenue that the city can use to subsidize that development.
However, for years critics have argued that TIF lacks transparency and has been used to subsidize development in non-blighted areas that don’t need it. In addition, TIF districts capture property taxes that would otherwise be split between schools, the city and special taxing districts such as the Chicago Park District. Around half of the property tax revenue collected by TIFs would otherwise go to Chicago Public Schools.
The current 136 TIF districts in Chicago cover about a third of the city. In 2018, Chicago TIF districts collected $841 million in property taxes, accounting for 12.5% of all property taxes collected in the city.
The timeline below highlights some of the major trends and events in Chicago’s TIF history: