Chicago, Illinois Central Loop Tax Increment Financing
Chicago, Illinois has established more than 120 Tax Increment Financing (TIF) districts, and has leveraged its public investment to attract $6 billion in private capital investments in these districts. Revenue from Chicago’s Central Loop TIF has been used to fund the city’s Green Roof Improvement Fund, which incentivizes and provides partial reimbursement to commercial buildings that install green roofs to manage stormwater. Chicago’s TIFs currently fund a small array of adaptive and climate-related projects, such as green alleys and wastewater infrastructure. More information about this TIF, which expired in 2008, can be found in GCC’s Green Infrastructure Toolkit.
However, some experts have expressed concerns about how TIF funds in Chicago have been used, and issued a call to better ‘democratize’ use of these funds to ensure that they are not diverted for non-public purposes. In February 2020, Chicago’s Mayor announced a series of reforms to promote transparency in the TIF system. These reforms included:
- The creation of a new TIF Investment Committee to supervise and guide future TIF investments. The committee explicitly aims to center equity in its decision making, and reviews proposals to expand access to TIF funds in disadvantaged communities.
- A more robust but-for analysis of TIF project expenditures, intended to guarantee that TIF funds are only used for projects which otherwise would not be completed without them
- The publication of a yearly program guide, to offer insight to taxpayers on how and where funds are allocated, and the City’s operation of the TIF program
- New availability of monthly data pertaining to the City’s allocation of TIF funds for researchers and the public
- Updating the online TIF portal for user-friendliness, allowing researchers and the public to easily visualize TIF spending and individual projects.
The vast majority of TIF projects are not environmental in nature, and there remains significant potential in using TIF funds for adaptable measures. Further emphasis could be placed on equity in a variety of ways. For example, the city may mandate that a specific portion of TIF revenue be used for adaptive measures in disadvantaged communities. Additionally, local residents of a particular TIF may be further consulted about development in their neighborhoods, increasing transparency in the way previously indicated by the Mayor. As Chicago has shown, TIF is a helpful tool to increase financing capability, but it must be directed at and built to serve the community it taxes.
Publication Date: 2020
- Equitable Adaptation Legal & Policy Toolkit > Financing & Funding Tools: Paying for Equitable Adaptation > Tax Credits, Tax Increment Financing & Land Value Capture
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