What TIFs Do

in the past, I’ve tried to let people how what Tax Increment Financing Districts affect their tax bills.

That’s why I am printing what the Monday Chicago Sun-Times editorial said on the subject.  Its context is the impact on the Chicago Public Schools (CPS), but I’m sure readers can figure out how it would affect them.

Irregardless of the existence of TIFs, CPS requests a set property tax revenue amount each year.–and that amount is capped by law.

When TIFs remove money from the overall property tax revenue pot, the tax rate is raised to generate the amount CPS requests.

In other words, there is no loss for CPS.

Tax rates go up, yes, but overall revenue for CPS does not go down.

But, the Sun-Times does not point out the obvious:

Everyone outside of the TIF District pays more money because their tax rates are higher than they would be if the TIF was not there.


What TIFs Do — 10 Comments

  1. I am being a bit stuffy but, irregardless is a double negative and incorrect.

    Should just be regardless.

    What is happening to our education system??

    All I hear from the teachers these days is talk of benefits and pensions.

    Nothing about the children or the quality of their education.

    We are in trouble.

  2. And when the tifdevelopments create additional schoo enrollment, as is the case with Lakewood passing resolution to install a minimum 100 unit low income housing development on their tif, the new students need to be paid for 100% by taxpayers outside the tif

    Usually tifs are formed on land within the municipality school district.

    Then at least Lakewood citizens who profit from tif must pay the costs arising from its formation.

    Not in this cassetteIn Lakewood s case, their tif is sited in land under Woodstock CUSS 200 boundaries

    This means Woodstock taxpayers will be forced to pay all education costs of (60 children per 100 units) for the lifetime of tif, 24-35 years.

    Ironically. The more Lakewood builds in the tif, the more tax revenues they get, and the higher the tax burden that is heaped entirely on Woodstock school taxpayers.

  3. I Read this paper. Is useless as it fails to analyze the economic effect of property tax burden transfer from one group of taxpayers to another.

    Property tax money paid by a homeowner is unavailable for local spending, and as property tax rates rise it socially engineers a trend toward disintegration of properties (anti-inducement to repair homes: higher taxes at higher rates).

    This lowers the school-supporting tax base value further, and the whole cycle is exacerbated. Property taxpayers’ home value destruction at the hands of tif is not addressed in this paper.

    The paper also ignores the MANY loopholes employed to bypass PTELL (exempted borrowing and spending, it just takes accounting the spending in the appropriate category).

    All the higher costs, both simple inflationary costs of tif development which doesn’t add new student enrollment, and the extraordinarily enormous cost burden of a tif which will be likely to add hundreds of new students to be educated ‘for free’ to the tif, but at the expense ($12,000 per year per pupil, not including debt service which is also huge) of other taxpayers…
    all that is ignored by this paper, so any conclusion is irrelevant.

  4. There is a very simple analysis to apply to tifs:

    Would our society survive if EVRYONE were granted tif status?

    Lakewood tif (on a golf course and farmland) proves that the qualifying factors of blight and but-for are, um, loosely construed.

    So look at all the similarly situated land west of Lakewood tif.

    This land has all the characteristics of blight and but-for and then some as the corner of 47&176.

    Every acre of that land (all around the county, a mile outside any given town) could be legally tif-worthy.

    That would enable all these properties to redirect any future growth in property taxes to the recipient of their choice (tif regulations and oversight in Illinois are also loosely construed).

    Could schools, government, Fire&Rescue, Conservation District, MCC, public employee pension taxation,etcetera survive 35 years on a budget based on 2014 EAV taxable at some tax rate that will be as high as the law allows?

  5. CPS can’t request New Growth in the TIF District though.

    Irregardless if the growth would or would not have happened but for the presence of the TIF, the bottom line, is CPS cannot obtain the new growth in the TIF district.

    Here are a few Illinois property tax concepts that allow one to better understand how TIFs work in Illinois.

    This is an overly simplistic review, there are some exceptions and omissions.

    If you list all the exceptions and omissions it is too difficult to grasp the main points.


    CONCEPT 1: A Taxing District is either Home Rule or Non Home Rule
    note 1: Illinois Taxing Districts are either Home Rule or Non Home Rule.
    note 2: Tax Caps do not apply to Home Rule districts.
    note 3. Tax Caps do apply to non Home Rule districts.
    note 4. Tax Cap is the lesser of CPI or 5%.
    note 5. The name of the Tax Cap law is named Property Tax Extension Limitation (PTELL).
    note 6: The total amount a taxing district bills taxpayers is called the extension.
    note 7: CPS is a non home rule taxing district.


    CONCEPT 2: New Growth resulting from construction is exempt from the Tax Cap.
    note 1: New Growth increases Equalized Assessed Value (EAV).
    note 2: EAV is approximately 1/3 of Actual Value.
    note 3: TIF freezes EAV.


    CONCEPT 4: Non Home Rule maximum extension when TIF not present = Tax Cap + New Growth.


    CONCEPT 5: Non home rule maximum extension when TIF present = Tax Cap.


    CONCEPT 6: TIF or no TIF, Taxing District receives Tax Cap revenue.


    CONCEPT 7: No TIF, Taxing District receives all new growth.


    CONCEPT 8: TIF, Taxing District does not receive new growth in the TIF.


    CONCEPT 9: TIF is a specialized taxing district that is a subsidiary of the municipality (city, village, town).


    CONCEPT 10: TIF is not a line item on the property tax bill.

  6. To simplify again,

    We all will pay more property taxes so the tif properties get free schooling and services.

    tif properties created generate property tax revenue, which is paid to Lakewood, who gives the money to developers.

    tif-generated revenues are assumed to be removed from the local economy by developers who live in nicer neighborhoods.

    Remember this tif is on farmland and a golf course.

    There are no schoolchildren there yet, nor need for police, fire, ambulance, conservation trails to stroll, storm water management, water consumption and treatment costs, road management, whatever whatever.

    Every single new thing on this tif will be a direct transfer of money from taxpayers in McHenry county who DO pay taxes to support the aforementioned schools, police, fire, ambulance, conservation trails, etcetera, directly to Lakewood managers to distribute to developers at their sole discretion.

    All the golf course jobs destroyed may find jobs available in Sportsplex, competing businesses up rte 47 may stay alive or fold without comparable tif kickbacks, or may insist on getting kickbacks in the future as a condition of remaining, surrounding homes may be pushed over the final threshold of pain as property taxes now at 4% of total home value are raised again to subsidize Lakewood and cause home values to crash further .

    These are relevant factors. Easy to relate to and understand.

    Anyone promoting a tif needs to take a moral inventory and understand that their profits come at a real human cost.

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