Tax Increment Financing (TIF) districts have long been opposed by Illinois PTA, with our legislation platform supporting changes to the TIF law since 2009. But Illinois PTA has not made making changes to the TIF law an advocacy priority in the past for a variety of reasons:
- There hasn’t been any significant legislation in the General Assembly proposing changes.
- TIF districts are extremely local—they are proposed by local governments and affect local taxes—so it’s hard to address on a statewide basis.
- There hasn’t been a lot of reporting on TIF districts, since their local nature requires reporting from local news organizations that often do not have the personnel to report on proposed TIF districts beyond the benefits being touted by the local governments proposing them.
CivicLab has recently released a report on all of the TIF districts in Illinois, and the information provided is stunning—TIF districts removed over $1.5 billion in local taxes in 2020.
What is a TIF District?
A Tax Increment Financing (TIF) district is created by a local government (e.g., city council, county board). The area designated a TIF district is supposed to be both blighted (e.g., vacant properties, poorly maintained properties) and unlikely to be improved “but for” the existence of the TIF district. A TIF district lasts for 23 years and can be renewed.
What the TIF district does is freeze the property taxes collected from the area, with the extra funds from improved property values going into the TIF fund to support development. These TIF funds are then used to give financial incentives to companies to redevelop blighted properties in the TIF district or to improve infrastructure in the TIF district.
WBEZ Chicago has created a 7-minute video that explains how TIF districts work and some of the problems with them.
Why are TIFs a Problem?
Because TIF districts freeze property taxes in an area, there is a cap on the funds coming from the district. This means that schools, libraries, municipal government, and all the other taxing bodies that make up your local tax bill all have their tax collection from the area frozen.
For example, because the focus of a TIF district is development, your school district could see an increase in the number of students attending schools because of new apartment buildings or housing developments in the TIF district. But because property taxes in the TIF district are frozen, your school district can’t raise taxes or capture the taxes from the higher property values in the TIF district to hire more teachers and staff. However, if part of the school district is not in the TIF district, property taxes in those areas can be raised (and have to be raised higher because the cost can’t be spread out across the whole school district) to pay for those new teachers.
In addition, because TIF districts collect more funds in areas that are already seeing some development rather than ones that have seen no development, many of them are located in areas that are already improving. One criticism of TIF districts is that they tend to focus on areas that would have been developed even without the TIF funding.
For example, many of the TIF districts in Chicago are located in the Loop, and because of the high property values already there, see a lot of TIF funds collected that then fund a lot of development. While there are TIF districts elsewhere in Chicago, lower property values result if lower TIF funds collected and less development supported. Thus, the “blighted” areas of Michigan Avenue see lots of TIF developments, while areas on the South Side see little development.
How Can I Find Out About TIFs in My Area?
In the past, if you wanted to find out about TIFs in your area, you would have had to go digging in various government reports. Thanks to the CivicLab’s work to illuminate all 1,454 TIF districts in Illinois for 2020, you can download the master spreadsheet or access a shared Google folder with TIF information by county. In the folders, you will find the reporting sheet for each TIF district, including which municipality created it, how much property tax was diverted to the TIF district in 2020, and how much has been diverted over the life of the TIF district.
What Can My PTA Do About TIF Districts?
For existing TIF districts, there’s not a whole lot PTAs can do other than advocate for transparency on where TIF funds are being used and for some TIF funds to be directed towards schools to account for the additional burdens the TIF developments are putting on the school district.
For proposed TIF districts, PTAs can oppose their creation or advocate for the school district to be carved out of the TIF district, allowing it to continue to collect property taxes in the TIF district as it normally would without the TIF existing.