“Chicago’s tax-increment financing program was meant to jump-start development in blighted neighborhoods. A sweeping new study argues that after four decades, the incentive has ‘spiraled out of control’ into a financing machine that has mostly boosted downtown and shifted more property taxes onto homeowners.
”But developers who have used TIF heavily to revive long-struggling neighborhoods say the findings paint too broad a picture of a critical tool still helping unlock private investment that conventional lenders and the market alone would not support.
”A deep-dive analysis of the TIF program by University of Illinois Chicago researchers found it has grown ‘far beyond its original intent of helping disinvested communities,’ particularly over the past dozen years as the total balance of all TIF districts skyrocketed to a record $3.4 billion in 2024.
”TIF districts split off property tax gains within a given area to be used for economic development projects in blighted areas of the city, particularly poorer neighborhoods.
”The study also found that since 1986, more than half of tracked TIF spending has backed projects in or near downtown.
”Yet critics of the study raised doubts about such direct connections between TIFs and property tax spikes, arguing that fair measurement of TIF impact requires far more than evaluating property tax growth within districts themselves.
”Among the general public, ‘there’s a fundamental misunderstanding of what TIF is, and the UIC study falls prey to that,’ said David Doig, a former city planning official who leads Chicago Neighborhood Initiatives, the non-profit developer that has spearheaded much of the revival of the Pullman neighborhood on the Far South Side since 2010. A CNI-commissioned report published last year found that redevelopment on and near a 180-acre former Ryerson Steel facility site rebranded as Pullman Park created thousands of new jobs and meaningfully boosted the neighborhood’s median household income.
”’Do you think anything in Pullman would have happened without TIF? Hell no,’ Doig said. ‘We had to have TIF to fund infrastructure costs, put in new roads, water, sewer — it wouldn’t have happened.’
”Doig said TIF’s early purpose in Chicago focused on rejuvenating desolate parts of the Loop and its environs, particularly projects like the theatre district and Millennium Park. More TIF money has also been dedicated downtown over the past decade partly because of unprecedented sweeps of surplus TIF funds to help balance the city’s budget.
”’When you take money out of TIF districts (in blighted neighborhoods) and surplus it, you’re taking the resources out that you need to grow,’ Doig said.
”TIF has been dedicated for major downtown projects since the pandemic battered the vitality of the city’s urban core. The city has approved $322 million in TIF to help developers turn vacant office space in outmoded buildings on and near LaSalle Street into apartments, with an emphasis on affordable units.
”Local taxpayers have had good reason to help bankroll downtown projects: The decimation of commercial property values in the heart of the city has dramatically reduced landlords’ share of the local property tax burden, leaving city homeowners last year with their largest property tax hike in at least 30 years, according to the Cook County Treasurer’s office.
”Other recommendations in the UIC study include pushing the city to be more aggressive about phasing out downtown TIFs ‘that have already accomplished their original goals;’ boosting TIF assistance to small business, neighborhood development and job and workforce development programs; overhauling the city’s TIF data reporting; and creating independent oversight of the TIF program.” (Ecker, Crain’s Chicago Business, 8/28/26)
Preservation Chicago views tax increment financing as an essential tool that has made possible many of Chicago’s most significant preservation successes. TIF is frequently the difference between an adaptive reuse moving forward and a historic building remaining vacant and deteriorating.
David Doig’s observations on Pullman deserve emphasis. Pullman is one of the great preservation and community development stories in Chicago, and it advanced because public investment in roads, water, and sewer made private investment possible. The LaSalle Street corridor conversions follow the same pattern, with TIF underwriting the cost of converting obsolete Loop office buildings into housing, including a significant percentage of affordable units.
The reforms proposed by the UIC researchers are worth taking seriously. Better data reporting, independent oversight, and retiring downtown districts that have accomplished their original goals would strengthen the program. The greater threat, however, is the surplus sweeps that drain resources from neighborhood districts to cover short-term operating deficits.
Preservation Chicago encourages the City to keep TIF focused on unlocking projects that would not otherwise happen, especially in neighborhoods of disinvestment.