Pritzker signs good government bill to show taxpayers how much of their property taxes go to developers

Pritzker signs good government bill to show taxpayers how much of their property taxes go to developers

Illinoisans will soon see their property tax bills listing tax increment financing districts and the amounts the districts are absorbing. Debate about the cost versus benefit should follow.

Property tax bills will soon feature more information on tax increment financing districts. Taxpayers will see what TIF districts they are in, and how much of their taxes will go to the districts.

House Bill 2209, introduced by state Rep. Sam Yingling, D-Grayslake, was passed unanimously by the state House and Senate. It was among 46 bills signed by Gov. J.B. Pritzker July 26, and is effective immediately.

TIF is an economic development tool used by local governments across Illinois to develop infrastructure by providing special economic incentives to private developers. It is intended to revitalize “blighted” areas.

The money for the developments comes from the local government capturing for up to 23 years the increases in property tax revenues that result from increases in real estate values in the TIF district. If a big box retailer builds atop a shuttered factory site, other local taxing bodies, especially schools, will only receive the property taxes they received from the vacant plant. The city gets the increased taxes from the development to pay for the improvements or incentives.

The problem is that in Illinois the definition of “blighted” is so vague that it’s been applied to prime sites on interstate interchanges and to upscale neighborhoods. TIF districts often cover much more land than the development site, including residential and commercial property. Affluent areas, including the Loop, captured nearly half of the $660 million Chicago collected in TIF revenue in 2017. Nearly one-third of total property tax revenue generated in Chicago was diverted to the city’s 143 TIF districts.

TIF got its start in the 1950s, but “in most cases, TIF has not accomplished the goal of promoting economic development” stated a 2018 report authored by University of Illinois at Chicago professor David Merriman. The report found TIF fund abuse was easier when transparency was lacking.

In Chicago, a joint investigation by the Better Government Association and Crain’s Chicago Business found in 2017 that former Mayor Rahm Emanuel’s administration obscured $55 million in TIF funds to pay for renovation at Navy Pier. Chicago boasts more TIF districts than the other nine largest cities combined.

Laws governing TIFs are often designed in a way that enables abuse of public funds, redirecting revenue that would have otherwise gone toward public services into opaque developer slush funds, according to the report. For example, property tax revenues lost to TIF funds leave Chicago’s public school system scrambling for alternate funding sources.

The new law is a good step forward because it requires disclosure of the lump sum allocated to a taxpayer’s local TIF district. To further increase transparency, experts recommend municipalities grant greater public access to information about TIF funds to improve performance and reduce abuse.

HB 2209 is a welcome move toward increasing transparency in TIF funds. Taxpayers deserve to know how much of their tax dollars go toward these economic development efforts, but that information should be the start of a wider examination of how effective the tool has been and at what cost to schools and other public services.

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