Chicago TIF districts property tax blight development failure report 2026: Study finds tax hikes, little growth in poor areas

Downtown vs. neighborhoods: Where TIF funds went

More than half of all spending from the city's TIF districts since 1984, when the first was created by former Mayor Harold Washington, funded projects downtown or in neighborhoods surrounding the Loop, the study concludes [S1]. Of nearly $2.6 billion in TIF funds used on private projects, 64 percent (around $1.6 billion) was allocated to five neighborhoods in and around Downtown [S3]. Five communities on the South and West Sides received $55 million in TIF funds for private projects, barely half as much as the Near North Side, the lowest recipient among the Downtown neighborhoods [S3]. "Instead of reducing the city's historic economic inequities, it has exacerbated them," said Juan González, a senior research fellow with the Great Cities Institute [S3].

The city also paid banks and other financial institutions more than $2 billion in fees and interest to administer the districts, or nearly 17 percent of the $11.8 billion TIFs have spent in total, according to the study [S1]. Downtown communities didn't only benefit from private development. The researchers also found that almost half of TIF spending they tracked since 1986 for projects such as affordable housing, parks and roads was also concentrated in and around Downtown [S3].

Mayor Johnson's reforms and the path forward

The study lauds the changes Mayor Brandon Johnson has made to the city's use of TIF, including his decision to declare $2.1 billion that flowed into the districts to be in surplus during his first three years in office [S1]. That sent those funds back to the city, county and Chicago Public Schools [S1]. Johnson has "begun to curb runaway character of the TIF tool and returned much needed revenue and tax base to the city's other taxing bodies," according to the study [S1]. That is nearly as much as his predecessors declared to be unneeded during the entire life of the programs [S1].

The study also praises Johnson's efforts to reduce the city's reliance on TIF districts to fund economic development projects by borrowing $1.25 billion to fund a wide-ranging slate of projects designed to expand the supply of affordable homes and good-paying jobs [S1]. That borrowing is set to be repaid as nearly half of the city's TIF districts expire, according to the mayor [S1]. The Johnson administration says it is moving away from relying on the program to spur development, pointing to a $1.25 billion Housing and Economic Development bond that would be a "long-term source of flexible, equitable funding" [S3]. The bond program aims to invest up to $3 billion across Chicago by 2028, prioritizing affordable housing and commercial projects on the South and West Sides [S3].

However, the study urges the city to establish independent oversight of the TIF program, since crucial decisions happen behind closed doors [S1]. "That such a large amount of money could be reclassified from 'restricted' to 'surplus' in just one year suggests a planning process that is extremely pliable or easily manipulated," according to the study [S1]. The study recommends that the city should spend less in TIF funds on projects downtown and in other affluent neighborhoods by allowing those districts to expire, and should use TIF funds to help small businesses, job development and workforce training programs [S1]. The city should also improve the quality of data available about TIFs and make it more comprehensible for the public [S1].