Recent attacks on the use of Tax Increment Financing districts have ignored two key points. First, a TIF is just a tool; it can be used or misused. Second, budget shortfalls for schools, hospitals and other key social programs in Chicago are caused by fundamental shortcomings in our state and county systems of taxation–not by the use of TIFs.
Once a TIF designation is approved, a “snapshot” is taken of the tax levies and the amount given to each taxing body is frozen at that level. Any increase in property tax revenues above that level–due to naturally occurring appreciation, inflation and new investment within the designated area–for a period of 23 years is spent according to an approved budget.
The use of TIFs to reward favored developers or wealthy suburban downtowns has given this device a bad name. TIFs organized for appropriate public purposes can spark development in deteriorated and underserved commercial areas, assist in the creation of affordable housing or fund infrastructure improvements not available from other sources.
I can proudly point to several examples of how TIFs have shown great promise in the 4th Ward. The TIF at 43rd and Cottage Grove assisted the construction of 276 units of architecturally attractive affordable rental housing, representing more than $35 million in private investment.
The City of Chicago is currently in the process of establishing three additional TIFs in the 4th Ward–Lake Park Crescent, Drexel Boulevard and Madden-Wells for the sole purpose of transforming former Chicago Housing Authority developments into viable mixed-income communities representing a total of more than 1,200 housing units.
These projects involve the redevelopment of land currently owned by the city that is not generating any tax revenues for the taxing bodies. These projects would not have occurred without the assistance of TIFs.
Elsewhere in the ward, I strongly supported the creation of a TIF for the 53rd Street business district. The creation of this TIF came as a result of a community planning process that developed a plan for the neighborhood’s main street. The primary purpose of this TIF is to address longstanding needs for public parking, infrastructure and school and park improvements. I have established a TIF advisory committee composed of 15 residents and business leaders to provide advice and guidance to me on the use of TIF funds.
TIFs are financing some much-needed projects in Chicago and have contributed to the redevelopment of many communities. To fully fund our infrastructure, educational and social service needs, we need a complete overhaul of state and county taxation. I would like to see us rely less on the property tax and turn to more progressive forms of taxation to fund some basic municipal functions.
I believe that direct community involvement and adequate controls on spending can make sure that TIFs assist our neighborhoods and don’t harm them. Those advocating for a fair share of tax revenue to be spent in our neighborhoods should insist on the creation of advisory councils, full public disclosure and discussion of the appropriate use of TIF funds.