After three months spent evaluating the current system, on Monday the Tax Increment Financing (TIF) Reform Task Force sent its report to Mayor Rahm Emanuel, who seeks to implement their reforms immediately. The purpose of the Task Force was to create a new, holistic policy with formalized goals and principles, as well as to make recommendations for increasing TIF transparency and accessibility.

“The recommendations of the committee reflect three months of careful consideration of this very complicated and important financing tool,” said TIF Task Force chair Carole Brown. “We are pleased to present the Mayor with these recommendations and commend him on his swift action.”

To help complete this agenda, the City launched a Task Force website so Chicagoans could post their own suggestions, while the Task Force held a public hearing. The Task Force also interviewed over 40 experts from across the country before drafting their 100-page report.

Chicago has 163 TIF districts. They cover 30 percent of the City's area and make up roughly 10 percent of its property tax base. Chicago collects about $500 million in incremental tax revenue each year. According to Illinois law, this money can only be used for certain development and infrastructure related expenses within district boundaries. 

The Task Force recommends the creation of a multi-year economic development plan for the city. The Mayor’s Office, City Council, and community stakeholders would work together on the plan which would help guide the development of TIF districts and projects. The Mayor has asked his Economic Council, World Business Chicago, the City Council, the private sector, and nonprofit leaders to work together to create a long-term plan.

“I believe TIF is an essential tool to help create jobs and economic growth for the City and its residents and we must ensure taxpayer dollars are spent wisely and on projects that contribute to our long-term economic development goals and job creation,” said Mayor Emanuel. “I commend the members of the Task Force for their strong, comprehensive analysis of the TIF program.”

The Task Force also believes TIF needs to be coordinated with the city’s multi-year capital budget, and that the City needs to establish strict performance metrics as well as require all TIF projects to undergo a thorough justification process in order to increase transparency and accountability. In cases where private developers do not live up to their obligations, the Task Force believes the City should respond immediately, and possibly by revoking TIF funds. The Task Force called for the creation of an internal TIF oversight board to ensure internal accountability.

To fund the reforms in their report, the Task Force recommends that the City uses a small percentage of available TIF income. This money would pay for the personnel and technology that would allow the necessary metrics to be produced and analyzed, TIF documents to be made public, and the use of TIF resources to be continually monitored.

“We strongly believe that increasing public confidence in the sue of tax increment financing is critical to the City of Chicago’s effort to support an enviable quality of life for all residents and to ensure its position as a preeminent global city,” wrote Brown in a note to the Mayor at the beginning of the report. “Moreover, increased public confidence is a prerequisite for optimal use of this important economic development tool. The importance of tax increment financing today is clear; tomorrow it will be the essential tool, as job deficits linger and federal and state resources are continually scaled back.”

In a press release, the Mayor's office stated the following six overarching recommendations made by the Task Force: 

1. Establish the City’s TIF Goals. The Mayor’s Office should develop a multiyear Economic Development Plan that is then submitted to the City Council for consideration. The Economic Development Plan should guide all future TIF district designations and project allocations.

2. Allocate Resources. The City should create a multi-year Capital Budget that is then submitted to City Council for consideration. The Capital Budget should detail the funding of City infrastructure needs, including those articulated in the Economic Development Plan. All TIF infrastructure allocations and porting decisions should be made in accordance with the Capital Budget.

3. Monitor Performance. The City should establish metrics for its use of TIF. These metrics will be used to benchmark (1) TIF district and project performance in aggregate; (2) alignment with the Economic Development TIF Reform Panel Report Plan; (3) achievement of district-specific goals appropriate for district type (i.e., industrial, commercial, residential or mixed use); (4) programmatic characteristics (TIF-NIP, TIFWorks, SBIF, etc.) and (5) project-specific characteristics. The City should compile data for and report on these metrics on a regular basis.

4. Increase Accountability. The City should make the justification for public funding of private projects more explicit, monitor projects more systematically to ensure recipients of TIF funding meet their obligations and ensure there are consequences for not delivering expected returns on public investment.

5. Take Action. The City should set and manage to performance thresholds for districts and projects. Every five years TIF districts should be subject to strategic reviews which lead to continuation of the district, revision of the district strategy or more significant change.

6. Enhance Oversight and Administration. The Mayor should empower an internal body with clear accountability for all aspects of TIF, and ensure that the staff and organizational capacity exist to execute recommendations and provide effective oversight.

Click here to read the full report.

The Task Force's 10 members included small business leaders, finance experts, City officals, and urban policy leaders. For a complete list of members, look below.

Members of the Task Force:

• Carole Brown (Panel Chair), Managing Director, Barclays Capital
• Hon. Carrie M. Austin, Alderman, 34th Ward and Chairman, Budget & Government Operations, City of Chicago
• Adela Cepeda, Owner and President, A.C. Advisory, Inc.
• Bruce J. Katz, Vice President, Brookings Institution and founding Director, Brookings Metropolitan Policy Program
• Melinda Kelly, Executive Director, Chatham Business Association Small Business Development, Inc.
• Steve Koch, Vice Chairman, Credit Suisse
• Andrew J. Mooney, Commissioner, Department of Housing and Economic Development, City of Chicago
• Laurence Msall, President, Civic Federation
• Julia Stasch, Vice President, The John D. and Catherine T. MacArthur Foundation
• Rachel Weber, Associate Professor, Urban Planning and Policy Program, University of Illinois at Chicago

To learn more about TIF, view the links below.