The TIF That Won’t Die?

June 13, 2008

The Chicago Reader

reported last week

on the 18-month lifespan extension of a downtown TIF district that had already benefited from hundreds of millions in diverted property tax revenue and had been scheduled for retirement in 2007. The current extension is rumored to be a dress rehearsal for a full 12-year extension.

The Central Loop TIF district was created in 1984 to spur development in the apparently jinxed Block 37—where plans for a new station providing rapid transit to O’Hare Airport

have just collapsed

—but it now covers a wide swath of the Loop, one of the nation’s leading business and commercial hubs. The district’s geographic expansion is an especially glaring example of how state and local governments in Illinois have turned TIF into a largely unregulated diversion of property tax revenue to spur development in already affluent or thriving areas.

Having burst its original physical boundaries, the Central Loop TIF district, like others in the state, has stretched its physical life as well. In Illinois, TIF districts are supposedly created for areas designated as “blighted”, allowing increases in property tax revenue in the district to be reserved for further economic development rather than allocated to local taxing authorities. State law originally limited the ordinary duration of TIF districts to 23 years, and public officials seeking to create TIFs

still cite this time limit


However, the Reader’s Ben Joravsky, who has extensively covered the cost to taxpayers, education, and public services of TIF overuse/abuse, recently reported that the Chicago City Council in 2000 quietly extended the original 23-year lifespan of the Central Loop TIF district, due to expire in June 2007, to December 2008.

The extension was made possible by a 1999 state measure pushed by Mayor Daley and City of Chicago lobbyists, who claimed TIF districts were being short-changed because of the lag between when taxes were levied and when they are actually collected. However, Joravsky cited figures from the Cook County Clerk’s office that show the Central Loop TIF had already collected over $2 million in diverted tax revenue within three months of its creation in 1984.

With the extended duration of some TIF districts to as long as 35 or 36 years–an eternity for school districts, park districts, and other services dependent on property tax revenue–

their economic development promise has become a nightmare.

The cost to schools and other public services and the unaccountability of Chicago’s TIF districts has long been controversial, due to the pioneering critiques of the

Neighborhood Capital Budget Group

(now defunct), the Center for Economic Progress and Illinois Housing Action. Cook County Commissioner Mike Quigly also

has called for

more accountability and openness in TIF expenditures by Chicago and its suburbs.

Even the Civic Federation, a leading Chicago business organization,

called in 2005

for the Central Loop and some other Chicago TIF districts to be retired so tax revenues could be restored. Last year a Federation report called for a

city TIF budget

, since “

TIF expenditures now occur in such a sporadic and obscure fashion that voters have difficulty knowing what's really happening.”

The tax revenues appropriated by TIF districts in economically robust areas are large.Last year, the

Cook County Clerk’s office noted

that the Central Loop TIF was one of two Chicago TIFs that “alone are collecting more revenue ($152.5 million) this year than all Cook County spends from property taxes toward public health.”

According to county figures cited by the Reader, the extension of the Central Loop TIF has meant an additional windfall of $48 million in diverted revenue for the first half of 2008 alone.

Nevertheless, Mayor Daley—who recently lobbied the Illinois legislature for $180 million for Chicago’s financially strapped school system, one of the public services starved by diverted TIF tax revenue —is reportedly seeking the legislature’s permission to extend the life of the Central Loop TIF by another 12 years.