4 Things to Know About Chicago TIF
| Public development incentives—particularly tax increment financing— aren't fading away. In fact, TIF remains as important as ever, DLA Piper partner Richard Klawiter tells us. Here are four things we should know about the funding mechanism. | ||
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1) TIF Supports Public Development Too Since tax increment financing was created in Chicago, nearly half of all TIF has funded public projects, says Richard, snapped moderating our recent capital markets event. (We were perhaps overzealous about keeping him hydrated.) About 40% has been used on public school capital improvements, while another 6% has funded public infrastructure improvements (parks, street improvements, public building improvement). A bit more than half of TIF has gone to support private real estate projects; but even so, a significant portion of that has been allocated to non-profit developers. 2) Its Role Has Expanded Since the inception of TIF, its uses for economic development have expanded. In many recent cases, TIF has supported job creation—often associated with the relocation of a business from elsewhere—or the redevelopment of large, locally important properties, such as the Marshfield Plaza mall. Also, TIF has supported preservation projects, both in the neighborhoods and downtown, such as the Blackstone Hotel (pictured below). |
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3) Heightened Scrutiny For TIF The Emanuel administration has reaffirmed the importance of TIF, and the city is using them with additional review and heightened scrutiny. In short, there’s greater transparency about how and why they are awarded. The "but-for" test is a critical one for projects to obtain the funding: but for the TIF, the project as we know it would not proceed—either at all, or without various important public amenities and improvements. 4) TIF Still Important The need for TIF in Chicago is as great as ever. As commercial underwriting has become stricter, public dollars are critically important for many projects. The goal remains to facilitate redevelopment of properties or areas that would otherwise not have the opportunity—and there’s a lot of work that remains to be done in Chicago. |
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