TIF Reform Panel Releases Final Report
On August 29, 2011, the City of Chicago’s TIF Reform Panel released its final report. The panel was formed in May 2011 to make recommendations regarding the transparency, accountability, and efficiency of the City’s Tax Increment Financing (TIF) program. TIF districts are created to fund economic development projects in blighted areas where development would not otherwise occur or in areas that may become blighted. Property tax extensions on increases in property value that occur after the district is established, or the “tax increment,” are used to fund TIF district projects.
The panel’s recommendations to reform TIF primarily focused on management, planning, and administration of the program. Recommendations included developing a multi-year city economic development plan that would guide TIF district designations and project allocations, as well as a multi-year city capital plan detailing infrastructure needs that can also be used to guide TIF infrastructure allocations. The panel also recommended that performance metrics for the TIF program be established and that performance thresholds for districts and projects be managed, including implementing TIF district reviews every five years. The report also provided a recommendation that accountability for the program be enhanced through explicit justifications of project funding, as well as more systematic project monitoring to ensure that TIF funding recipients meet their obligations and that consequences for not meeting obligations exist.
The report recommended that the economic development plan, capital plan, and performance measurement and accountability measures be made publicly available. This aligns with recommendations set forth in GO TO 2040 that encourage transparency and public accountability through efficient governance. Enhancing transparency creates a participatory environment where residents can interact with units of government and gain a better understanding of how decisions are made. Increasing transparency should increase public confidence in government and public programs, including the TIF program.