A closer look at how TIFs are played in Chicago

SHARE A closer look at how TIFs are played in Chicago

Understanding exactly how tax increment financing districts work can be complicated, but the Chicago Reader’s Ben Joravsky, along with community activist Ron Ernst, take a closer look at how they fuction in Chicago. And how the system is played.

First, the basics.

Once a TIF is established, the amount of tax dollars schools, the city, parks and the county get to collect in that district is frozen for 24 years. As property values rise, the additional money goes into TIF accounts, which the mayor can use as he sees fit.

But if property values fall, do TIF accounts lose out on money?

Not necessarily, says Ernst, pointing to the printouts to show what he’s discovered. They can change the tax code.

Joravsky reports that if a parcel of land is underachieving, it is taken out of the TIF district to prevent bringing down the overall tax haul. Taking it out of a TIF involves assigning that parcel of land a new tax code.

Imagine I have my own TIF district consisting of parcel A and parcel B, each worth $100 when the TIF is created. If parcel A goes up in value to $200 but parcel B falls in value to $0, then there’s no overall growth in the Ben TIF. But if you segregate parcel B—that is, change its tax code—then the Ben TIF gets the full $100 growth of parcel A. And the mayor gets a little more slush to spend on something he really wants, regardless of whether anybody else wants it—like that basketball arena for DePaul in the South Loop.

There aren’t any rules or regulations on how parcels are moved out of TIFs. The city’s planning office reaches out to the clerk’s office and the changes are made.

Cook County Clerk David Orr said they have to keep such a process in place because the current tax code system usually undercounts the amount of money that should be going into the TIF acounts.

“While imperfect, this practice offers a way to work around the antiquated property tax computer system, which is not flexible enough to meet the needs of the complicated TIF calculations,” Orr said.

READ THE FULL STORY AT CHICAGOREADER.COM

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