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Chicago’s budget proposes aggressive analysis, reforms to TIF districts for developments

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‘The days of the TIF slush fund are over,’ says Lightfoot

A grey building with signage that reads City Hall. There are three people walking by.
City Hall in Chicago.
AFP/Getty Images

On Wednesday, Mayor Lori Lightfoot presented new details on her administration’s budget plan which includes changes for homeowners, but not the steep property tax increase many residents were dreading.

During her speech in the City Council chambers, Lightfoot announced the proposed budget’s key reforms to the city’s tax-increment financing (TIF) tool.

“This year’s additional surplus to the city is $31.4 million,” Lightfoot said. “But more than that, my team has undertaken a detailed review process to reform TIF and align it more closely with our economic development needs, and our values of accountability and transparency. The days of the TIF slush fund are over.”

In the past few years, TIF has become a controversial way for developers to fund infrastructure for projects located in once “blighted areas.”

Currently, there are 140 TIF districts throughout the city, which capture a portion of property tax revenue in their respective areas. If not all of the revenue is used for the infrastructure projects, that money is then referred to as a surplus. Any surplus must be returned to the city clerk for a balanced redistribution, according to state law.

In the 2020 budget, Lightfoot’s administration predicts that the TIF surplus will grow to about $300 million—the largest amount in Chicago’s history, Lightfoot’s administration noted.

Essentially, the budget formalizes certain processes for declaring a TIF surplus and “more aggressively analyzes every TIF to determine the available balance and declaring a surplus from the balance not reserved for projects,” the budget overview document said.

By claiming a percentage of the surplus, there will be an additional $74.1 million in the city’s general operating fund and $163.1 million for Chicago Public Schools.

In 2012, then-Mayor Rahm Emanuel averted a second teachers strike by using TIF surplus—claiming the revenue was only possible as a one-time solution. Mayor Lightfoot is facing a five-day strike from members of the Chicago Teachers Union who are in gridlock over issues of class size, hiring more librarians and nurses, and housing assistance.

While on the campaign trail, Lightfoot railed against the massive TIF districts for megadevelopments like Lincoln Yards and The 78. Although the districts were approved, she was able to get a larger commitment to employ minority- and and women-owned construction firms.