Tax Increment Financing Reform

Partner: 
Harvard Business School
Ice Miller LLP
Ross School of Business at the University of Michigan
Client: 
City of Chicago
Practice Area: 
Economic Growth
Project Year: 
2011
Project Description: 

In August 2011, with the support of Civic Consulting Alliance and partners, Mayor Rahm Emanuel's Tax Increment Financing (TIF) reform panel presented a report outlining its recommendations for improving Chicago's use of TIF, a development tool that generates roughly $500 million in incremental property tax revenue each year.

Mayor Emanuel established the ten-member panel in his first week in office and tasked it with evaluating the City's current TIF process and performance and developing recommendations to improve transparency, efficiency, and oversight.  The overall objective of the TIF Reform Panel was to make recommendations to help the City make more effective use of TIF as an economic development tool and to ensure that the City and taxpayers could better understand and evaluate the return on investment of TIF expenditures.

The panel’s final report recommended reforms in three main areas:



  • Increased public transparency of TIF decisions and investments through more comprehensive and accessible data sharing, published on-line

  • Enhanced accountability through more systematic monitoring, regular performance reviews, and clear linkages to a multi-year capital budget

  • Maximized performance explicitly connected to a clear economic development and job creation plan for the city.


The work of the panel was supported, on a pro bono basis, by the Civic Consulting Alliance and partners. Together with members of the panel, the team conducted more than 40 interviews with national TIF experts, finance leaders, economic development experts, and City of Chicago TIF staff. Additionally, the team researched the practices and outcomes of TIF in six U.S. cities and counties.  The public was invited to submit comments and suggestions through a City of Chicago website and at an open public hearing, attended by nearly 250 individuals with 60 people providing testimony.

At the time Mayor Emanuel commissioned the panel, Chicago had not published a comprehensive policy governing the use of TIF funds or the creation of TIF districts.