Research Methodology

To examine the nature of TIF assistance in Chicago, we reviewed the 163 TIF Agreements adopted by the City between 2000 and 2008 which were available on the City of Chicago website as of March 1, 2010. No additional documentation was examined. Of these 163 Agreements, 7 Agreements were excluded because they were deemed incomplete. An additional 2 Agreements were excluded because they provided a pledge of TIF assistance for a discrete part of a larger project only and because the total budgets for these projects were not available, resulting in an unknown pledge percentage. The remaining 154 TIF Agreements were then categorized based on the general type of project to be developed.⁷ Each project type was further divided into descriptive sub-categories. Ultimately, specific data about each project, including project budget, amount of assistance, form of assistance and term of assistance were collected and tabulated in a spreadsheet.⁸ Certain results of this research are included in this Article.

Scope of Research

Based on our research, the total project budget for all projects was approximately $8 Billion. The project budgets used in the research were the budgets included in the TIF Agreements and may be different from the actual project budgets determined at the time of project commencement or completion. For each project, we compared the pledge of TIF assistance to the total project budget without consideration of the total amount of TIF eligible costs for each project.⁹ Additionally, a pledge of a certain amount of TIF assistance to a project does not guarantee that the project will receive that amount of pledged TIF assistance. The City’s pledge is based on the amount of available tax increment and may be reduced if insufficient tax increment is generated. Projects may also receive less than the maximum amount of TIF assistance based on the failure to meet certain conditions set forth in the TIF Agreements, including, for example, minimum employment requirements or operating covenants.

7 Of the 154 TIF Agreements available on the City’s website, 7 Agreements were unsigned documents and were not attached to City Ordinances. We relied solely on the information available on the City’s website for the data and we did not seek further verification as to these or any other TIF Agreements included in the research.

8 If the TIF assistance pledged by the City was in the form of an interest-bearing note or in the form of TIF Bonds, then the present value of the obligations was equal to the assistance amount. If, however, the pledge was paid on a pay-as-you-go basis over a period of time, the present value of the pledge would be less than the amount pledged in the TIF Agreement because of the discount rate.

9 TIF eligible costs are set forth in the Illinois Tax Increment Allocation Redevelopment Act, 65 ILCS 5/11-74.4-1 et seq., as amended, and include, for example, costs of land acquisition, demolition, site preparation, rehabilitation of existing buildings and public improvements.