Cook County’s nearly 450 tax-increment financing (TIF) districts reaped a record $1.6 billion from property taxpayers last year, a new report shows. Just a dozen of the districts, mostly in or around downtown Chicago, accounted for nearly half the haul.
The TIF program lets cities freeze the level of property taxes that are delivered to local governments within specific areas, and divert all new tax growth into special funds that city administrators can tap for construction projects in those areas for 23 years. Designed to kick-start private development in struggling neighborhoods, the tool has drawn increasing criticism for siphoning hundreds of millions of dollars to fast-growing areas already attractive to developers, forcing school districts and other local governments to hike taxes to balance their budgets.
The latest data is unlikely to quiet the critics.
Chicago led the way in TIF capture, beating its previous record of $1.05 billion by more than 15%, even as city leaders let a handful of districts expire. The opposite occurred in Cook County’s 150-plus suburbs, where TIF revenues declined by more than 13% due to sinking assessments even as towns added new districts.
Those were the topline takeaways from the report released last week by Cook County Clerk Karen Yarbrough on TIF revenue from the 2021 tax year, which property owners paid last year due to the county’s delayed tax collection system.
A handful of TIF districts bring in most of the county’s revenue
Here are eight more takeaways from the report:
Chicago’s largest TIF districts are also some of its fastest-growing, as taxes in wealthy and gentrifying areas pour into construction funds at accelerated speeds. Cook County’s three largest TIF districts — all of which overlap or abut downtown Chicago — together brought in about $101 million more in 2021 than they did in 2020. That means they alone were responsible for the entire net revenue increase among Cook County’s 448 TIF districts, and about half the increase registered by the city’s 129 districts.
The city’s biggest TIF has collected less than meets the eye
The TIF district that collected the most money last year was the RPM transit TIF, which the City Council created in 2016 to help fund the CTA’s $2.1 billion Red Purple Modernization Plan. The district traces most of the Red Line’s North Branch, stretching 6 miles from North Avenue on the Near North Side to Devon Avenue in Rogers Park.
Unlike typical TIF districts, transit TIFs are limited in that they don’t siphon off tax dollars that would otherwise go to Chicago Public Schools. They also last 35 years, meaning that absent intervention, the RPM TIF will keep drawing funds until 2051.
At first glance, the latest data would seem to indicate the RPM Transit TIF has already hit its funding goal years earlier than expected.
A 2016 CTA presentation projected for the TIF to raise $625 million for the project, with the rest of the funding due from city and federal sources. Yarbrough’s report shows that the TIF’s fundraising outpaced projections, and after five years in existence, the district had already collected $632 million.
But Chicago Public Schools claimed more than $300 million of that amount, and the special rules of this transit TIF dictate that 20% of the remaining money passes along to other taxing bodies. That means only about $242 million of the revenue the TIF has collected thus far can be tapped for rail construction and related costs, according to a spokesman for the Chicago Department of Planning and Development.
The Red Purple Modernization project is slated for completion in 2025, but the TIF district’s 35-year lifespan means it may legally remain on the books until 2051. The district “could be terminated early provided all financial obligations have been met,” the spokesman said.
City has deep pockets for LaSalle Street housing plan
The downtown LaSalle Central TIF is unmatched among the city’s traditional, non-transit TIF districts, having collected about $175.5 million from taxpayers last year. The infusion added to the nearly $197 million that was already sitting in the TIF’s fund balance at the end of 2021, according to city planning department records.
Mayor Lori Lightfoot has pledged to tap the LaSalle Central TIF district to help fund the construction of 1,000 new housing units, including as many as 300 affordable units, as part of an effort to breathe new life into the flagging LaSalle Street corridor in the Loop.
Developers have already pitched about $1 billion in rehab work to transform nearly a dozen historic office buildings along the corridor, Block Club Chicago reported last week.
City leaders have set no target for how much TIF money they’re willing to shell out to boost the effort. But records show they have hundreds of millions of dollars already in the bank, with revenues on track to increase each successive year.
Created in 2006, the LaSalle Central TIF district is not scheduled to expire until 2029.
TIF expirations will return tens of millions to local governments…
Chicago leaders acted in 2021 to sunset three TIF districts, including the substantial River South district, which raised nearly $26 million during its last active year. The planning department and City Council followed up last year by voting to shutter another four relatively small districts — Archer Courts, Montclare, Roosevelt/Union and Peterson/Cicero — that brought in a combined $8.9 million last year.
Those numbers represent tax money that will now resume flowing to the city’s general fund as well as to its school district, park system and other government taxing bodies.
Since Lightfoot became mayor in 2019, the city has opted to let seven TIF districts expire and voted to sunset another eight districts early, all while creating just two new districts, including a transit TIF to fund construction of a long-promised southern extension to the CTA Red Line.
…while TIF renewals will keep siphoning hundreds of millions away
City leaders since 2019 have exercised a legal option to tack an additional 12 years on to the lives of seven existing TIF districts, including some of the highest-grossing districts in the city, with more renewals planned in the coming year.
The Kinzie Industrial TIF, which includes the booming Fulton Market district and which the City Council voted to extend last month at the planning department’s urging, raised almost $98 million last year, outpacing its revenue from the prior year by more than 36%.
The City Council voted last year to add 12-year extensions to four TIF districts, including Kinzie Industrial. Together, they raised about $110 million in revenue last year.
City planning officials have indicated they plan to push renewals for an additional nine TIF districts this year, including the Pilsen district, which pulled in more than $33 million last year. The nine districts combined for more than $102 million in revenue during the 2021 tax year, up from less than $79 million the prior year.
South Side, south suburban TIFs saw sinking revenues
Almost half the county’s 400-plus TIF districts collected less money last year than they did the year prior — nearly all of them in the suburbs, as Cook County Assessor Fritz Kaegi’s 2021 Chicago reassessment pushed up city valuations while suburban assessments sank, especially in the Southland.
But TIF revenues also declined in more than 30 Chicago districts, including multiple districts in parts of the South Side widely believed to be gentrifying. The 53rd Street Industrial Corridor, which spans affluent corners of Hyde Park, saw its TIF revenue decline by almost 7% following lower assessments. The nearby Washington Park and 71st/Stony Island TIF districts held steady, but the 73rd/University district saw the sharpest revenue drop of any district in Chicago, raising only about $73,000 last year after taking in more than $660,000 the year prior.
Tax haul in northwest suburbs could mean big bucks for Bears
Although TIF revenues took a dive in most suburban districts, many of those that raised the most revenue were in Chicago’s northwest suburbs.
The biggest cash haul of any district outside Chicago last year belonged to the Busse/Elmhurst district in Elk Grove Village, which raised almost $28 million for construction along the booming industrial corridor just west of O’Hare Airport.
Another significant earner was Arlington Heights, whose four TIF districts raised more than a combined $3.3 million last year — a 23% jump over their haul from the previous year. Their performance could bolster village leaders who have signaled they’ll propose a new TIF district at the Arlington Race Course to help fund infrastructure around a new Chicago Bears stadium.
Property taxpayers bear the burden of TIFs
The $361 million collected by suburban TIF districts last year represent about 4% of all property taxes collected by Cook County governments outside Chicago in 2022.
The more than $1.2 billion in Chicago TIF revenues represent a far bigger chunk — nearly 16% — of the total property taxes paid by Chicago residents to their local taxing bodies.
City officials and other defenders of the TIF system argue that people who live inside the districts don’t see direct changes to their tax bills as a result. But by depriving taxing bodies of revenue, TIFs force them to raise their overall tax levies to cover their costs, adding to the tax burden across the board.
If the nine Chicago TIF districts in line for 12-year extensions this year were instead allowed to expire, the owner of a city home worth $250,000 could save about $74 in annual property taxes, according to an Illinois Answers Project analysis.