Chicago’s Tax Increment Financing: Who Paid, Who Gained?
Executive Summary
This report from the UIC Great Cities Institute examines more than four decades of Chicago’s use of Tax Increment Financing (TIF), asking whether the program has delivered the kind of public benefit its scale would suggest.
Tax Increment Financing is a way cities fund development projects using future growth in property tax revenue. When a TIF district is created, the amount of property tax revenue generated in that area is essentially set at a starting level. As property values rise, the additional tax revenue above that starting point is placed into a TIF fund. That money can then support projects such as infrastructure improvements, housing, schools, parks, or private development. The idea is that these investments will help stimulate development and increase property values.
The report finds, however, that Chicago’s TIF system has grown far beyond its original purpose of encouraging development in areas experiencing disinvestment. Since 1984, TIF districts have generated approximately $16.6 billion in revenue. Yet the report concludes that much of the property value growth captured by TIF would likely have occurred even without the program. Between 2014 and 2023, TIF increased property tax rates citywide by an estimated average of 13.7 percent, while only 1.8 percent of growth in property values within TIF districts was attributable to TIF-supported development.
The report also finds that TIF benefits have been distributed unevenly. About 51 percent of tracked TIF project spending since 1986 went to downtown or nearby neighborhoods, including investments in private development, housing, schools, infrastructure, and parks. At the same time, substantial property tax growth was directed into TIF funds rather than immediately supporting schools, libraries, parks, and other public services.
While the report recognizes recent reforms under Mayor Brandon Johnson, it argues that deeper structural changes are still needed. Its recommendations include stronger transparency and oversight, allowing more property tax revenue to remain available for schools and essential public services, phasing out downtown TIF districts that have already achieved their original goals, and directing more resources toward small businesses and historically underserved neighborhoods.