As Chicago officials look for ways to ease the city's pension and budgetary issues, Chicago Mayor Rahm Emanuel says seven downtown tax increment financing (TIF) districts will be phased out, a move that is expected to provide $250 million in governmental revenues over five years.
Under Emanuel's TIF plan reported by the Chicago Sun-Times, the seven economic development districts will be terminated after TIF balances for current projects in the areas are paid down completely. In the meantime, new spending in the seven TIF districts will be halted.
TIF money in the districts is currently being put toward new CTA stations and the Chinatown library, among other uses.
CPS is expected to get $125 million in revenue over five years under the TIF plan, and the city would get $50 million. Other funds would be set aside for "emergency infrastructure projects," according to the newspaper.
Among other TIF changes, Emanuel wants to make permanent his 2013 executive order related to TIF surpluses and increase the availability of TIF data. He's also looking to implement a "TIF termination policy," which would detail when automatic TIF-district termination is appropriate.
For those living in a TIF district, which typically has a life cycle of 23 years, a portion of their property tax dollars gets diverted from local units of government, like the school and park districts, and funneled into the TIF district's fund.
In return, TIF money is doled out to companies for local economic development projects, such as a retail facility, that will supposedly generate future property taxes inside a TIF district. TIF money is also often used for infrastructure improvements as well as other public-sector and non-profit projects.
UPDATE (4:21 p.m.): Members of the Chicago City Council's Progressive Reform Caucus have issued statements in response to Mayor Rahm Emanuel's TIF reforms, including his decision to phase out seven downtown TIF districts.
"The administration's announcement today represents a great victory for Chicago's working families," said Ald. Scott Waguespack (32nd), chair of the Progressive Reform Caucus. "For many years, we have fought for the closure of TIF districts in thriving areas where funds are not essential to subsidizing development. We are encouraged today that millions of dollars will be redirected to areas where they are urgently needed -- especially our public schools."
Caucus members also weighed in on the mayor's plan to make permanent his TIF surplus executive order from 2013.
"The Progressive Caucus has long advocated for the return of surplus TIF dollars to schools and other local government bodies in need of funding," said newly-elected Ald. Susan Sadlowski Garza (10th). "While we hope that ultimately even more of the surplus TIF funds can be redirected each year, this is progress in the right direction."
Ald. Roderick Sawyer (6th) added that the caucus will keep up its call for other Chicago TIF reforms.
"We will continue to push for clearer standards by which to define 'blighted' areas that need TIF support," he said. "And we renew our call to allow CPS to opt out of TIF to reduce the fiscal impact of the program on our public schools."