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Tax Increment Financing Policy Guidelines

Policy Guidelines Cover

The Tax Increment Financing Policy Guidelines summarize general TIF investment policies and guidelines for private development projects as practiced by the Department of Planning and Development, which is the administering department for development projects seeking TIF and other forms of subsidy assistance from the City of Chicago.

The summary is intended to help applicants in determining the appropriateness of a proposed project for TIF assistance while meeting the goals and objectives of the City and the plans for the designated TIF district. Also included here is information on long-term monitoring of TIF projects and TIF districts as well as policies governing TIF accountability.

Tax Increment Financing (TIF) is the City of Chicago’s most successful economic development tool, used to promote private investment across the city leading to jobs for city residents and better neighborhoods. Funds are also used to make improvements to Chicago’s physical assets such as roads and infrastructure, clean polluted land and put vacant properties back to productive use, usually in conjunction with private development projects. TIF funds are leveraged to encourage private-sector investment and job growth, and in doing so, they ensure Chicago’s future vitality and quality of life.

State statute governs the establishment and amendment of TIF districts. Funds are generated by growth in the Equalized Assessed Valuation (EAV) of properties within a designated district over a period of 23 years. When an area is declared a TIF district, the value of property in the area is set as a base EAV amount. As property values increase, all property tax growth generated by higher values can be used to fund redevelopment projects within the district. The increase, or increment, can be used to pay back bonds issued to pay upfront costs, or can be used on a pay-as-you-go basis for individual projects. At the conclusion of the 23-year period, the increase in value over the base amount is available to all taxing bodies in the city. Funding levels for specific projects are coordinated with area plans and goals.

Download the Policy Guidelines.