One of the many misconceptions about TIF in Chicago is that only private developers, and therefore private projects, can benefit from the program.  Based on our recent research, however, it seems that public projects experience significant benefits from TIF assistance.

We completed our Chicago TIF Study earlier this year.  As part of the Study, we examined all of the TIF Agreements approved by the City of Chicago between 2000 and 2008.  Of the 154 projects, 24 were public/education projects in which the City pledged a total of approximately $550,000,000 in tax increment, or approximately 1/3 of the total amount of TIF Assistance pledged during this period.  On average, public/education projects received a pledge of TIF assistance in an amount equal to approximately 60% of their project budgets, significantly higher than other categories of projects.  These projects included, for example, the construction or redevelopment of educational facilities and museums and the creation of parks and open space.  For more information on our findings, visit http://www.polskylaw.com/chicagotifstudy/cover.html.

How can tax increment be pledged to these public projects even when they don’t generate any real estate taxes?  Typically, a pledge of all or a portion of tax increment generated by the entire TIF District rather than the individual project is made, or in certain cases, a pledge is made from adjacent TIF Districts.  This is often the case in the construction or rehabilitation of a school, where multiple TIF districts benefit.  Because multiple TIF Districts benefit, Illinois TIF law provides that tax increment generated in adjacent TIF Districts can be used to pay for such projects.

TIF Funds are often used to pay for public improvements throughout a TIF District, even if those improvements are not related to a specific project, such as street lighting, public transportation shelters and sidewalk repairs, which can benefit all properties within a TIF District.

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