How Do TIFS Work?

WHAT IS A TIF?

TIF stands for Tax Increment Finance.

When a TIF district – say, this one is created –
The value of ALL the properties inside the district is assessed or calculated and the total amount of property tax generated by all those properties is noted – let’s call that number the BASE AMOUNT OF PROPERTY TAX REVENUES. The life span of a TIF district is 23 years. For the next 23 years all property revenue ABOVE this BASE AMOUNT is captured by the TIF district. This amount – the amount over the BASE is called the INCREMENTAL REVENUE. The process looks something like this:


The important thing to note is that the city and county are fueled by property taxes. Just about every thing we do or use in the city – police, fire protection, the public schools, public transit, the public libraries, our parks and the basic operations of the city and county – these are all powered by our property taxes. If you rent, then a portion of your rent will eventually make it into that pool, as the owner of the property you rent must pay property taxes. In Chicago some twelve agencies depend on property taxes to operate:


Here is another look at who relies on our property taxes for their operation:


So if TIF districts take property taxes “off the top” – how does this affect all those agencies that rely on property taxes for their operation?

HOW MANY TIF DISTRICTS ARE THERE?

There are 163 TIF districts in the city of Chicago. In 2011 they collected $454 million in property taxes.

Chicago TIF districts
Since the first TIF was created in Chicago in 1986, they have extracted over $5 billion in property taxes (according to the Cook County Clerk’s Office).


TIFs have grown through out Cook County, not just in Chicago.

Number of TIF Districts-1979-2011
WHO GETS TIF DOLLARS?

The Chicago News Co-op (now defunct) did an extensive research project to answer this question. using ONLY data from 2002 to 2010 they found that HALF of all the property taxes captured by TIF districts went to private businesses. What about the 16 years BEFORE that time period?

TIF revenue & uses
Here are some of the companies that have received property tax subsidies or other benefits from the TIF program in Chicago:

Surprise! These companies got YOUR tax dollars.
And there is:

  • Hyatt Hotel Hyde Park -$5,200,000 [Download the development plan – Harper_Court-Hyatt_CDC]
  • K-Mart -$3,700,000
  • Quaker Oats -$13,000,000
  • Union Station Health Club -$3,200,000
  • Block 37 developers -$12,000,000
  • Chicago Symphony -$2,500,000
  • Sears -$13,700,000
  • United Airlines -$32,000,000
  • Rush Medical Center -$75,000,000
  • Loyola University -$20,400,000
  • Sara Lee -$5,000,000
  • Wrigley -$15,000,000
  • Home Depot -$8,000,000
  • Keebler – $2,000,000
  • Jewel/Osco – $9,600,000
  • Target -$9,900,000
  • UPS – $11,300,000
  • Wilson Yard developer -$54,200,000
  • Grossinger Auto – $8,500,000

Here is a humorous (but fact based) look at TIFs by Adam Verwymeren for the Medill News Service.

IT’S A STATEWIDE ISSUE

Across the state of Illinois some 445 municipalities have spawned 1,220 TIFs. According to the Illinois State Comptroller’s Office, 530 of these TIFs – or FULLY 43.4% – are out of compliance and had not filed their required annual reports or other paperwork at the time the last state report was issued (9/14/12).[ Download the report here: 2010-State_TIFNonComplianceReport]

IT’S A NATIONAL ISSUE

TIFs are in every state except two, Arizona and Wyoming.

[TIF Report Home Page] [Visit The TIF Reports web site to see our ongoing research]

3 thoughts on “How Do TIFS Work?”

  1. Question: If a building is not in a TIF district but is in a ward that has TIF’s, then how are the real estate taxes of the buildings in the ward but not in a TIF impacted? My building is in award with tif’s but not in TIF and it does not look like the one on your web site.

    PJD

    1. Some would argue that you will see a tax increase since the services you need (schools, police, fire, sanitation, streets) won’t see an increase in revenue due to the TIF, but the only way to increase revenue for these service is to raise taxes elsewhere to fill the balance.

  2. How do I find out if the TIF Program will be coming to my area? I am in the 20th Ward Alderman Willie B. Cochran and the last 2 rounds of TIF Programs were not announced in my area, the Alderman is really not informative to any type of information for the community and when he does; he sends information out late which leaves us out of the loop. Please contact me to let me know the next round of TIF in the area…I am considered the 20th Ward 47th/Halsted TIF NIP. Thanks Zellores

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