The problem I have with Chicago’s TIF program isn’t the program itself, but rather that it has turned into a form of corporate welfare for politically connected developers. Too much of the money goes where it isn’t needed, instead of where urban blight actually exists.
Local residents once called the far western stretch of Madison Street the downtown of the West Side. That was before the race riots and factory closings of the late 1960s sent this area around the thriving commercial corridor into a tailspin of population loss, poverty, crime and blight.
When Chicago set out over a decade ago to turn around the crumbling retail area, it created a tax increment financing district along Madison Street from West Garfield Park to the city limit at Austin Avenue. But halfway through the TIF’s 23-year life span, the city has spent only $4.8 million on commercial revitalization projects there, and western Madison Street remains a place of struggling retail strips and vacant, decaying blocks.
Criticism of TIFs under Mayor Richard M. Daley focused largely on his administration’s heavy spending of TIF funds in and around Chicago’s thriving downtown. But the scant investment along Madison raises a key question not answered by a TIF reform task force created by Mayor Rahm Emanuel: Can the city’s primary economic development tool help reverse decades of economic decline and physical decay in Chicago’s poorest neighborhoods?
The TIF program was created 27 years ago specifically to spur development in the city’s blighted areas. When the city creates a district, it freezes the amount of property taxes that local governments can collect within a particular area for a period of 23 years. If property values rise during that time, the city is required to spend the additional property-tax revenue — the tax increment — on economically beneficial projects within the district or in a bordering one.
Whether they are public works or business subsidies, the projects are meant to catalyze development within the district. But if property values do not rise and create money for new investment, TIFs are virtually powerless to spur growth.
“It’s very difficult for those poor places to be turned around by this tool because the property taxes aren’t going to generate enough revenue to do the massive push that you need,” said David Merriman, an economics professor and director of the Institute of Government and Public Affairs at the University of Illinois. “There’s got to be development to generate revenue, and that’s probably not going to work unless you already have some market momentum.”
According to a Chicago News Cooperative analysis of the last eight years of Mr. Daley’s tenure — during which the city escalated TIF investment — only 23 percent of the $1.84 billion in TIF funds spent went to districts in the city’s poorest neighborhoods.
(click here to continue reading TIF May Need a Boost in Poor Neighborhoods – NYTimes.com.)
Twenty three percent is a woefully small percentage. Is the TIF program enough to spur neighborhood revitalization? Who knows, what’s obvious is that nobody is even trying.