The Problem

Although tax increment financing (TIF) has been around for over thirty years, many people do not understand how it works, how it affects their communities or their pocketbooks. Most people have no idea a significant portion of their property taxes are flowing into the hands of real-estate developers instead of their schools, public libraries or parks.

It’s likely only a small percentage of people know Chicago collected almost $500 million from its TIF districts in 2008, or that it took in over $555 million in 2007. Could that money have been better used? Who is in charge? It’s unknown to most.

The process of creating TIF districts goes widely unnoticed by taxpayers footing the bill for TIF developments, and many TIF developments take root in areas that are not exactly “blighted,” including Chicago’s Lincoln Park and the “Loop” downtown business center of Chicago. There is an unacceptable lack of transparency in the world of TIFs—particularly when it comes to the procedure for establishing and managing TIF developments and the funding of TIF developments in non-blighted areas.

This lack of transparency can lend to the abuse of how TIF funds are spent. Mayor Daley, for example, has thrown around the possibility of using TIF funds to balance the City of Chicago’s FY2011 budget. Whether or not this occurs, it highlights how elected officials can use TIF funds for their own ends instead of the legal purpose of promoting economic growth in blighted communities.

Our Solution

TIFs have a significant economic impact on communities throughout Illinois, and yet many people are unaware how large that impact really is. In order to end the exploitation and lack of public control in the creation of TIF districts, reform starts with making the entire process more transparent. Second, the public needs more control, allowing them to vote on whether to create a TIF district in their community. Lastly, state law must eliminate the loopholes concerning the definition of “blight” so that only truly blighted, low-income neighborhoods are allowed to have TIFs built with tax dollars.

Why This Works

Too much money comes out of hardworking taxpayers’ pockets for there to be such minimal public knowledge about TIF. Taxpayers deserve more transparency in the TIF process, which would foster more government accountability, improve public understanding, and help enforce ethical behavior for everyone involved in TIF management and financing.

Often, TIFs are created in the least of blighted areas, which goes entirely against the intent of why TIF was established in the first place: to help generate development in low-income, blighted communities. The state needs a stricter definition of “blight” and only allow low-income, truly blighted areas to create a TIF in order to stop the abuse of this process.

Too large a portion of tax dollars flows into a TIF district for communities to have such a lack of say in the TIF process. The public needs more authority over when, how and if a TIF can develop in their neighborhoods.