In response to the evolving COVID-19 pandemic, the City of Chicago has joined the State of Illinois in issuing a Stay at Home order effective Saturday, March 21st at 5pm CT. In addition, City of Chicago facilities are closed to the public. Staff are prioritizing essential services to protect the health and safety of our residents and employees. As such, we may be delayed in responding to non-essential inquiries and service requests. To stay up to date on the City of Chicago’s COVID-19 response, please visit the City Coronavirus Response Center site.
The following is the Executive Summary of TIF Reform Task Force report. Click here for a full copy of the report.
The TIF Reform Panel was formed by Mayor Rahm Emanuel for the purpose of reviewing the City’s use of Tax Increment Financing (TIF), making recommendations for improving the transparency and efficiency of the City’s use of TIF, and identifying ways to strengthen the ability of TIF to meet the City’s economic development goals.
Chaired by Carole Brown, the panel included small business leaders, finance experts, City officials and urban policy leaders. The panel held a public hearing, received public comments on the City’s website, sought input from members of City Council, interviewed a broad range of stakeholders and experts, and thoroughly examined the use of TIF in other cities to craft this report’s recommendations. The panel’s goals were to develop a comprehensive TIF policy, recommend metrics to track the performance of TIF districts and projects, improve the transparency of the City’s use of TIF, and propose ways to link TIF spending to a broader City financial strategy.
Chicago contains 163 TIF districts, which cover 30% of the City’s area and comprise about 10% of its property tax base. TIF generates roughly $500 million in incremental tax revenue each year, and by state law this money may only be spent on certain development and infrastructure related expenses within district boundaries. Despite the extent of the City’s use of TIF, TIF projects, districts and processes have lacked sufficient transparency and oversight. The City has not established a formal policy governing the establishment of TIF districts and the use of TIF funds, and information about TIF districts, projects and processes has not been made easily available to the public.
Although the City has successfully used TIF to encourage economic and community development in underperforming areas, many improvements are possible. The following six recommendations would significantly improve the transparency, efficiency, results and oversight of the City’s use of TIF:
1. Establish the City’s TIF Goals. The Mayor’s Office should develop a multiyear Economic Development Plan that is then submitted to the City Council for consideration. The Economic Development Plan should guide all future TIF district designations and project allocations.
2. Allocate Resources. The City should create a multi-year Capital Budget that is then submitted to City Council for consideration. The Capital Budget should detail the funding of City infrastructure needs, including those articulated in the Economic Development Plan. All TIF infrastructure allocations and porting decisions should be made in accordance with the Capital Budget.
3. Monitor Performance. The City should establish metrics for its use of TIF. These metrics will be used to benchmark (1) TIF district and project performance in aggregate; (2) alignment with the Economic Development TIF Reform Panel Report Plan; (3) achievement of district-specific goals appropriate for district type (i.e., industrial, commercial, residential or mixed use); (4) programmatic characteristics (TIF-NIP, TIFWorks, SBIF, etc.) and (5) project-specific characteristics. The City should compile data for and report on these metrics on a regular basis.
4. Increase Accountability. The City should make the justification for public funding of private projects more explicit, monitor projects more systematically to ensure recipients of TIF funding meet their obligations and ensure there are consequences for not delivering expected returns on public
5. Take Action. The City should set and manage to performance thresholds for districts and projects. Every five years TIF districts should be subject to strategic reviews which lead to continuation of the district, revision of the district strategy or more significant change.
6. Enhance Oversight and Administration. The Mayor should empower an internal body with clear accountability for all aspects of TIF, and ensure that the staff and organizational capacity exist to execute recommendations and provide effective oversight.