Mayor Proposes Taking TIF Deals ‘Out of the Shadows’

CHICAGO—Promising greater transparency in the city’s Tax Incremental Financing approval and oversight process, Chicago Mayor Lori E. Lightfoot announced on Wednesday what she termed are sweeping TIF reforms.

Those proposed reforms, which affect how TIF spending occurs within existing districts, will increase transparency for future TIF allocations while establishing new guidelines for TIF spending, internal review and approval processes and public disclosures, according to the mayor.

“For too long, the city’s TIF spending decisions have occurred in the shadows,” says Mayor Lightfoot. “With our reforms, we are bringing a new level of transparency to the way the city spends precious taxpayer dollars, while holding private recipients of TIF dollars accountable to higher standards during the review and approval process.”

TIF is a state-regulated economic development tool that allows municipalities to allocate property tax growth within designated TIF districts toward local needs involving economic development, public infrastructure, schools, affordable housing and other uses.

“Each year, the city receives hundreds of millions of dollars in property taxes through the TIF program—and residents deserve to know that their money is being used well,” says Deputy Mayor of Economic and Neighborhood Development and chair of the TIF Investment Committee, Samir Mayekar. “With these reforms, we are committed to being more transparent with TIF decisions and ensuring that communities have information on the spending considerations that directly impact them.”

Among the proposed reform measures include the creation of a new TIF Investment Committee. As one of her first acts in office, Mayor Lightfoot reorganized an existing TIF Task Force committee that internally reviewed potential TIF expenditures. The newly created TIF Investment Committee now aims to center equity in its decision making. Supported by the city’s first-ever Chief Equity Officer Candace Moore, the committee has developed a routine analysis to guide future investments and ensure they are aligned with the administration’s commitment to promoting equity citywide. The committee will continue to meet mostly to review proposals that expand access to TIF funds for businesses and neighborhoods that have historically lacked the investments that other neighborhoods enjoyed.

The mayor also promised rigorous analysis of TIF proposals. The TIF Investment Committee has directed the Department of Planning and Development to adopt a more robust “but-for” analysis for all private applicants for TIF funds. These changes, which affect the way TIF spending occurs in existing TIF districts, are meant to guarantee that TIF funds are only used for projects that wouldn’t otherwise move forward, city officials state.

Other proposals include the publication of new TIF Program Guide, which will be updated annually, that will offer clarity to taxpayers, researchers and the development community on how the city operates its TIF program.

Mayor Lightfoot has also directed the Department of Planning and Development to publish TIF spending decisions on a monthly basis. Going forward, the city will publish annual reports as well as a new, user-friendly version of the long-standing online TIF Portal. This information is now available at Chicago.gov/tif.

The administration has implemented other TIF reforms since taking office, starting by eliminating the possibility of conflicts of interest for consultants who prepare proposals on developer-driven TIFs

To ensure the city’s economic investments do not rely solely on a one-off, developer-driven approach, Mayor Lightfoot will direct DPD to develop a broad, comprehensive vision for investment in each neighborhood to ensure the future economic investments by the city are allocated fairly, transparently, and in a way that makes the most responsible use of taxpayer dollars.

“By bringing these long-needed reforms to the TIF program, Mayor Lightfoot is sending a clear signal to our neighborhoods and developers that her administration is committed to ensuring this tool generates equitable, economic growth for underinvested communities, exactly as it was designed to do,” says Ralph Martire, executive director for the Center for Tax and Budget Accountability. “We are heartened to see the City take these important first steps for ensuring clearer guidelines for future allocation of taxpayer resources and believe this will bring greater stability and predictability to the market for communities and developers alike.”