Mayor Brandon Johnson’s $1.25 billion plan to boost affordable housing, revitalize commercial areas and fund small businesses relies on a controversial funding strategy: redirecting property taxes freed up as Chicago’s tax increment financing districts expire.
Under the plan, the city will service the $1.25 billion debt using the property tax revenues from expiring TIFs, the Chicago Tribune reported. That wouldn’t require property tax hikes, and surplus revenues will still benefit schools, parks and city services, the administration says.
However, the initiative ties up a significant portion of property tax income for debt payments, raising concerns about financial flexibility.
TIFs, introduced in Chicago in 1984, have long drawn criticism for limiting incremental tax revenue to specific projects within their districts. Critics argue they’ve acted as opaque slush funds for political pet projects, while supporters credit them for spurring economic growth in struggling areas.
Dozens of Chicago TIF districts are reaching their 23-year lifespan. Between 2024 and 2027, 29 districts will sunset, with 18 extended, leaving 90 active TIFs.
The city estimates debt service costs for the $1.25 billion bond will peak at $81 million annually by 2032, with $24 million to $57 million in annual surplus tax revenues remaining.
For institutions like Chicago Public Schools, expiring TIFs mean new, predictable revenue streams. CPS could see additional funding grow from $54 million this year to over $100 million by 2030, addressing budget gaps and infrastructure needs without increasing taxpayer bills.
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Despite some aldermanic resistance, the move has gained traction, with proponents arguing the bond’s flexibility allows for citywide investment unhindered by TIF boundaries. Critics, however, warn that dedicating tax revenues to debt payments restricts future fiscal options.
— Andrew Terrell