Municipal Investment and Property Value Appreciation in Chicago’s Tax Increment Financing Districts

Abstract

To determine whether Tax Increment Financing (TIF) triggers or captures growth, we examine the relationship between expenditures and property value change in Chicago’s TIF districts. A regression model relates spending type, which varies from infrastructure to developer subsidies, to a district’s property value growth between 2002 and 2012. Results show variation in the impact of spending, with subsidies for commercial development having the clearest positive relationship while infrastructure spending has a negative effect. Although trends are less clear over the long run, these differences underscore how the effectiveness of TIF cannot be surmised without accounting for variations in spending.