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 Property tax bills will soon feature more information on tax
increment financing districts. Taxpayers will see what TIF districts they are
in, and how much of their taxes will go to the districts.
House Bill 2209, introduced by state Rep. Sam Yingling, D-Grayslake, was passed
unanimously by the state House and Senate. It was among 46 bills signed by Gov.
J.B. Pritzker July 26, and is effective immediately.
TIF is an economic development tool used by local governments across Illinois to
develop infrastructure by providing special economic incentives to private
developers. It is intended to revitalize “blighted” areas.
 The money for the developments comes from the local government capturing for up
to 23 years the increases in property tax revenues that result from increases in
real estate values in the TIF district. If a big box retailer builds atop a
shuttered factory site, other local taxing bodies, especially schools, will only
receive the property taxes they received from the vacant plant. The city gets
the increased taxes from the development to pay for the improvements or
incentives.
The problem is that in Illinois the definition of “blighted” is so vague that
it’s been applied to prime sites on interstate interchanges and to upscale
neighborhoods. TIF districts often cover much more land than the development
site, including residential and commercial property. Affluent areas, including
the Loop, captured nearly half of the $660 million Chicago collected in TIF
revenue in 2017. Nearly one-third of total property tax revenue generated in
Chicago was diverted to the city’s 143 TIF districts.
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TIF got its start in the
1950s, but “in most cases, TIF has not accomplished the goal of
promoting economic development” stated a 2018 report authored by
University of Illinois at Chicago professor David Merriman. The
report found TIF fund abuse was easier when transparency was
lacking.
In Chicago, a joint
investigation by the Better Government Association and Crain’s
Chicago Business found in 2017 that former Mayor Rahm Emanuel’s
administration obscured $55 million in TIF funds to pay for
renovation at Navy Pier. Chicago boasts more TIF districts than the
other nine largest cities combined.
Laws governing TIFs are often designed in a way that enables abuse
of public funds, redirecting revenue that would have otherwise gone
toward public services into opaque developer slush funds, according
to the report. For example, property tax revenues lost to TIF funds
leave Chicago’s public school system scrambling for alternate
funding sources.
The new law is a good step forward because it requires disclosure of
the lump sum allocated to a taxpayer’s local TIF district. To
further increase transparency, experts recommend municipalities
grant greater public access to information about TIF funds to
improve performance and reduce abuse.
HB 2209 is a welcome move toward increasing transparency in TIF
funds. Taxpayers deserve to know how much of their tax dollars go
toward these economic development efforts, but that information
should be the start of a wider examination of how effective the tool
has been and at what cost to schools and other public services.
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