CHICAGO GIVES UP $1.6 BILLION TO GET $360 MILLION
April 4, 2006
The definition of blight -- as it is used in eminent domain cases -- has been expanded to include almost any property in the United States. Consequently, tax increment financing (TIF) districts are now being used in growing and affluent areas for big-box retailers, high-end condominium developments, sports stadiums and arenas, and anything else cities want to put money into, says the Heartland Institute.
Most local officials do not take into account development that would occur without TIF. In Chicago, the Neighborhood Capital Budget Group (NCBG), a coalition of 200 Chicago organizations that studies local public investment, looked at 36 of the city's TIF districts in 2002. The NCBG:
- Found property values were rising in all of them during the five years before they were designated as TIFs.
- Projected that over the 23-year life span of the TIF districts, the taxing bodies in the city will lose $1.6 billion in property tax revenues due to TIF districts, while the city will gain $361.9 million of projected "new" revenues attributable to TIF.
The taxpayers are big losers, as are taxing bodies, particularly public school districts. Development often means more housing and more students, but the TIFs move the costs of those new students to other taxpaying members of the school district.
The NCBG study found, for instance, that the 36 TIF districts would cost Chicago public schools $632 million in tax revenues.
Source: Daniel McGraw, "Chicago Gives Up $1.6 Billion to Get $360 Million," Heartland Institute, March 1, 2006.
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