Chicago's new mayor, Brandon Johnson, is striking early in his term with a bold proposal to borrow a whopping $1.25 billion - funds slated to energize the city's affordable housing sector and spur development projects across the Windy City. In a sharp pivot from his predecessors, Johnson's plan would see the city depart from the much-criticized tax increment financing (TIF) districts that have been a bone of contention in municipal finance for years.
According to the Chicago Sun-Times, the mayor intends to let dozens of TIF districts expire and instead use their recouped tax revenue to pay off the new debt. The report suggests this is Johnson's strategy to hit two birds with one stone, Funding housing, and development while simultaneously phasing out a funding mechanism that has been historically inequitable. Planning and Development Commissioner, Ciere Boatright, told the publication, “TIF is not and has not been historically the most equitable tool.” In contrast, Johnson's administration believes the borrowed funds can kick-start investments in parts of Chicago that have been neglected for too long.
However, this plan comes with a hefty price tag in interest alone, roughly estimated at $2.4 billion over a 37-year span. But official estimates, according to Block Club Chicago, peg the city's recouped tax revenue from expiring TIF districts in the ballpark of $2.2 billion over 15 years. Despite the massive costs, the mayor's office is gunning for a March endgame to get council approval.
As for where the boatload of funds would go, $625 million is earmarked for each, the Department of Housing and the Department of Planning and Development. Among the slated initiatives are the construction and maintenance of affordable rental homes, homeownership opportunities, and bolstering small business support. Critics have long slammed TIF districts for their inability to effectively distribute benefits across socio-economic disparities. Johnson's move, obtained by WBEZ, aims to eliminate such financial barriers, allowing “the city to use its money more freely to invest in communities across the city.”
The tapestry of TIF criticism is woven with concerns that they contribute to the deepening of systemic inequities by funneling money primarily into areas where the property values were already ascending. Housing Commissioner Lissette Castañeda underscored this in her remarks to WBEZ, stating the bond proceeds would be a funding source “that could be tapped instead of TIF dollars — without being restricted to the boundaries of a TIF district.” It seems that Johnson's Chicago is gunning for a more equitable spread of developmental wealth, one bond at a time.
