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Chicago Magazine recently reported about the effectiveness of Tax Incremental Financing districts (TIFs) and if they actually result in more jobs and economic development in the areas they are targeted for. In the article, Whet Moser references data from a study done by an assistant professor, T. William Lester at UNC-Chapel Hill. The study looked at job growth in areas with a TIF district and  those without and compared it from 1999-2000. The study found there was no significant difference between the areas with a TIF district and without. Professor Lester concludes:

Overall, this analysis finds no support for either of the main hypotheses tested: that the use of TIF in Chicago generates economic development opportunities for local residents that could not have otherwise occurred or that TIF catalyses private actors to invest in distressed neighbourhoods.

The Professor also talks about the original intent of TIF districts being to help economic growth in “blighted” areas, but has been expanded to fund other uses.

After 1995, TIF usage accelerated significantly, extending into ‘conservation areas’ that did not have to meet as many ‘blight’ criteria. This made it easier for the City to justify the use of TIF in a much wider set of neighbourhoods and for a broader set of economic and community development goals.

Ben Jaravsky of the Chicago Reader wrote about TIFs in affluent areas of the city getting significantly more then the areas that are blighted.

As has always been the case, the richest TIFs are located in the richest communities. In this case, the Near South TIF district is this year’s big winner, bringing in about $65 million.

It covers that poor and blighted community just south of the Loop where lots of prosperous professionals live. Mayor Emanuel’s predecessor set up the TIF district to help subsidize a housing complex that he eventually moved into. Sweet move, Mayor Predecessor!

The city’s TIF fund runs at a surplus every year. A group of councilman failed to get an ordinance to a vote that would allocate additional surplus funds to the Chicago School District.

Instead, David Sirota of Pando Daily uncovers what the money is being used for:

Living up to his billing as “Mayor 1%,” Emanuel has used the fund to (among other things) offer up $7 million of taxpayer cash for a new grocery store, $7.5 million for a proposed data center, $29 million for an office high rise and $55 million for a huge new hotel (and that latter project is on top of $75 million more in tax money Emanuel has offered up to build a private university a new basketball stadium). And these are just a few of the corporate subsidy proposals in a $300 million spending spree Emanuel has championed at the very moment he has pled poverty to justify pension cuts, property tax increases and the largest school closure in his city’s history.

Meanwhile, the communities that the TIF districts were supposed to help, Humbolt Park, Englewood and South Chicago, remain some of the most struggling and dangerous in Chicago. According to Professor Lester, those neighborhoods didn’t gain more jobs or have their property values increase despite having their tax money go into the TIF fund.

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