July 17, 2014
A new report by Cook County Clerk David Orr released on July 16 finds that 68.2% or 103 of Chicago’s 151 tax increment financing (TIF) districts experienced revenue declines in 2013. Only 30 TIFs reported revenue increases, while 21 of the districts did not collect any revenues at all. Suburban Cook County TIF district revenues also decreased, falling by 2% from nearly $266.3 million to $260.9 million.
The Clerk’s Office annual TIF report provides information about revenues collected for each of the active 435 TIF districts in Cook County in the most recent collection year compared to the prior year. This year, the report is also accompanied by the release of a new interactive TIF mapping tool that will allow web site users to find TIFs by address or property identification number, review and export TIF revenue information and make their own maps with drawing and text tools. The tool will be accessible by desktop computer or mobile device.
Revenues for the City of Chicago’s 151 TIF districts fell by 7.65% or $35 million in 2013. That is a drop from $457.0 million to $422.0 million. The most significant reason for the overall decline in total Chicago TIF revenues is the termination of three districts in 2013:
- The Stockyards/Industrial Corridor: in 2012 the district reported $1.9 million in revenues.
- Near West – Madison/Racine: in 2012 the district reported $13.8 million in revenues.
- 89th and State Streets: in 2012 the district reported approximately $369,000 in revenues.
These three TIFs included a total of 4,065 parcels. The parcels will now be returned to the property tax rolls for the City and its overlapping governments. The property taxes previously paid to the TIF by property owners will then be paid to those governments if the local government levies for expiring TIF increment. (See Civic Federation blog post, “How are Local Governments Able to Access Extra Property Tax Revenue from Expiring TIF Districts?”)
The declines in the 103 TIF districts reporting revenue decreases in 2013 are likely a reflection of several factors including stagnant or declining growth in the value of real estate in Chicago and/or a lack of economic growth in those particular TIF districts.
Some of the other highlights of the report follow:
- No new Chicago TIFs were added in 2013.
- The largest Chicago TIF in 2013 by revenue was the Near South TIF district, which had $65.2 million in revenues. This TIF is due to expire in 2014.
- The size of the 105th/Vincennes TIF district was expanded significantly in 2013 with the inclusion of 4,383 parcels. With this addition, the TIF’s size has expanded from 192 to 4,575 parcels.
- In 2012 nine TIF districts that reported no revenues were terminated. These were the TIFs at 72nd and Cicero, 73rd and Kedzie, Homan/Grand Trunk, Howard/Paulina, Eastman/North Branch, Division/North Branch, Division/Hooker, Lakeshore/Clarendon and West Grand.
How TIF Works
Tax increment financing (TIF) is a financial mechanism that is widely used by municipalities and other governments to promote economic development and redevelopment. The use of TIF is intended to generate economic development activity that would not have occurred “but for” the incentives offered. In Illinois, both counties and municipalities may utilize TIF financing and TIFs can receive property, sales or utility tax revenue.
In property tax TIF districts, the EAV of the district at the time of creation is measured and established as a baseline, which is often called the “frozen” EAV. Tax revenues from the incremental growth in EAV over the frozen amount are used to pay for redevelopment costs such as land acquisition, site development, public works improvements and debt service on bonds to fund improvements within the district. Once the redevelopment project is completed and has been paid for, the TIF district is dissolved and the increment EAV is added to the tax base accessible to all eligible taxing districts. In Illinois, TIF is authorized for a period of up to 23 years, with the possibility of renewal for an additional 12 years. (See Civic Federation Issue Brief on Tax Increment Financing.)