Study Questions Chicago’s TIF Payoff; Developers Defend Its Impact
Summary
By Danny Ecker, August 28, 2026 06:00 AM CDT
Chicago’s tax-increment financing program was meant to jump-start development in blighted neighborhoods. A sweeping new study argues that after four decades, the incentive has “spiraled out of control” into a financing machine that has mostly boosted downtown and shifted more property taxes onto homeowners.
But developers who have used TIF heavily to revive long-struggling neighborhoods say the findings paint too broad a picture of a critical tool still helping unlock private investment that conventional lenders and the market alone would not support.
A deep-dive analysis of the TIF program by University of Illinois Chicago researchers found it has grown “far beyond its original intent of helping disinvested communities,” particularly over the past dozen years as the total balance of all TIF districts skyrocketed to a record $3.4 billion in 2024. (Read the full report here.)
TIF districts split off property tax gains within a given area to be used for economic development projects in blighted areas of the city, particularly poorer neighborhoods. The program has long been criticized for its elastic spending rules, often pilloried as a mayoral slush fund tapped for uses other than boosting struggling communities.
UIC’s Great Cities Institute research hub examined publicly-available — though often difficult to access and comprehend, it noted — TIF data from 2014 through 2023 and attempted to quantify the extra costs the system has forced on property owners. By lockboxing property tax gains in TIF districts instead of using that money for basic public services, the report concluded the city has inflated homeowners’ tax bills while also dedicating much of the blight-fighting money on projects in and near downtown.
“Our research produced a complex and at times troubling story of the promises and pitfalls of an urban revitalization program that spiraled out of control, of an obscure tool that swelled into one of the most powerful and least scrutinized instruments of city finance, and of how property taxes captured by TIF shaped Chicago’s current landscape and accelerated the city’s historic wealth inequities in ways that its original goal of ‘reducing blight’ never envisioned,” the report said.
Stark statistics in the report link TIFs to a shift in who shoulders the local property tax burden.
UIC researchers calculated that between 2014 and 2023, TIF increased property tax rates citywide by an estimated average of 13.7%. For a typical Chicago homeowner with a $300,000 home, that meant an extra $878 in property taxes in 2023 and $6,616 over the 10-year period.
The report also estimated that TIFs have done little to actually grow property values, suggesting that only 1.8% of property value growth within districts was “directly attributable to TIF-supported development” and that the vast majority of property value growth captured by TIF would likely have occurred even without the program.
The study also found that since 1986, more than half of tracked TIF spending has backed projects in or near downtown.
The findings add new ammunition to longstanding arguments that TIFs have strayed far from their original purpose and become a flawed, inefficient way to steer public money toward private development.
Yet critics of the study raised doubts about such direct connections between TIFs and property tax spikes, arguing that fair measurement of TIF impact requires far more than evaluating property tax growth within districts themselves.
Among the general public, “there’s a fundamental misunderstanding of what TIF is, and the UIC study falls prey to that,” said David Doig, a former city planning official who leads Chicago Neighborhood Initiatives, the non-profit developer that has spearheaded much of the revival of the Pullman neighborhood on the Far South Side since 2010. A CNI-commissioned report published last year found that redevelopment on and near a 180-acre former Ryerson Steel facility site rebranded as Pullman Park created thousands of new jobs and meaningfully boosted the neighborhood’s median household income.
“Do you think anything in Pullman would have happened without TIF? Hell no,” Doig said. “We had to have TIF to fund infrastructure costs, put in new roads, water, sewer — it wouldn’t have happened.”
Doig said TIF’s early purpose in Chicago focused on rejuvenating desolate parts of the Loop and its environs, particularly projects like the theatre district and Millennium Park. More TIF money has also been dedicated downtown over the past decade partly because of unprecedented sweeps of surplus TIF funds to help balance the city’s budget. Mayor Brandon Johnson used a staggering $1 billion in unused TIF money this year for that purpose, almost double the record set the year before.
“When you take money out of TIF districts (in blighted neighborhoods) and surplus it, you’re taking the resources out that you need to grow,” Doig said.
The UIC report argued the record surplus declarations have been logical in recent years, with citywide TIF fund balances jumping by a whopping 50% between 2021 and 2024. When TIF money is surplussed, it is distributed proportionally among taxing bodies like Chicago Public Schools, the city, Cook County and various local agencies.
TIF has been dedicated for major downtown projects since the pandemic battered the vitality of the city’s urban core. The city has approved $322 million in TIF to help developers turn vacant office space in outmoded buildings on and near LaSalle Street into apartments, with an emphasis on affordable units.
Slightly outside the central business district, massive TIF subsidies are lined up for the Foundry Park megaproject on the North Side and The 78, which will pull money from an existing West Loop TIF district to help fund infrastructure around the new Chicago Fire FC soccer stadium.
Local taxpayers have had good reason to help bankroll downtown projects: The decimation of commercial property values in the heart of the city has dramatically reduced landlords’ share of the local property tax burden, leaving city homeowners last year with their largest property tax hike in at least 30 years, according to the Cook County Treasurer’s office.
But the UIC report confirms that TIF money has been too concentrated downtown over time, said Scott Henry, CEO of Chicago-based affordable housing developer Celadon Partners. He said the study showed how that TIFs have created “only modest incremental value” in many blighted neighborhood districts, and smartly noted that the city must use TIF funds more efficiently to boost affordable housing citywide.
The report said the “mushrooming per unit costs” for TIF-subsidized affordable housing projects due to “soft costs” like legal and professional fees make them far more expensive to build than even luxury multifamily housing downtown. UIC researchers specifically called out the roughly $900,000-per-unit cost of United Yards, a 51-unit project Celadon co-led in the Back of the Yards neighborhood.
“We can make meaningful progress in closing the housing deficit in Chicago in the next 10 years through a combination of lower soft and hard costs (for affordable housing projects) and TIF used for development rather than as a budget backfill,” Henry said in a statement.
Other recommendations in the UIC study include pushing the city to be more aggressive about phasing out downtown TIFs “that have already accomplished their original goals;” boosting TIF assistance to small business, neighborhood development and job and workforce development programs; overhauling the city’s TIF data reporting; and creating independent oversight of the TIF program.
The report also praised the Johnson administration for moves designed to focus more TIF money in blighted neighborhoods. Researchers approved of its plan to borrow up to $1.25 billion for housing projects, bonds that would be paid off using proceeds from dozens of TIF districts that are scheduled to expire in the next few years. TIF districts last for an initial term of 23 years, and the bond program would effectively allow the city to direct more TIF money into neighborhoods without geographic restrictions.
Yet the UIC researchers said the rollout of the bond plan has been too slow. Nearly two years after the City Council approved issuing of the bonds, only 12% of the funds had been committed to individual projects, the report said.
In a statement to Crain’s on the UIC report, a spokesman for the mayor’s office said TIF “is a powerful but flawed and inequitable tool for economic development” and cited the bond plan as an important step toward “correcting decades of disinvestment.”
The statement noted that 450 TIF-assisted economic development projects have advanced under Johnson and that 95% of those are outside of downtown, with nearly half located on the South and West Sides.