Tax Increment Financing (TIF) and Health Inequities - Health & Medicine Policy Research Group

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Tax Increment Financing (TIF) and Health Inequities

September 5, 2017 Written By: Margie Schaps and Wesley Epplin

Crain’s Chicago Business’ and the Better Government Association’s recent report on Mayor Rahm Emanuel’s administration funneling Tax Increment Financing (TIF) dollars to Navy Pier provides an opportunity for health advocates and researchers to ponder TIF usage in Chicago. Unacceptably, the pass-through appears to contradict both the law and the explanation the Mayor gave to the City Council for the $55 million expenditure of public funds.

This story outlines likely corruption and demonstrates why Chicago’s broader TIF usage needs to be scrutinized. The State of Illinois municipal code clearly lists reasons for why TIFs can be established: reduction of blight and unemployment, and improvement of public health in an area where development would not otherwise occur. Mayor Emanuel promised to allocate funds more fairly than his predecessor Mayor Daley, but this has not been the reality. Chicago has many TIF districts located in areas virtually devoid of blight. Meanwhile, many neighborhoods in desperate need of investment receive comparatively tiny portions of TIF funds, worsening Chicago’s economic gap.

In other words, the recent corruption falls against a backdrop of the standard TIF usage in Chicago, which already worsens community development inequity in the city—pointing to deeper injustice in the use of TIF funds.

Establishing TIF districts in well-developed neighborhoods where tax revenue is rapidly growing takes potential funding from other important public entities, such as the City’s general fund and Chicago Public Schools. By concentrating TIF development investments in wealthy, majority white neighborhoods—at the expense of our children’s education and the opportunity to invest in low-income neighborhoods and communities of color—Chicago’s current TIF usage exemplifies class inequity and structural racism in public policy.

TIF allocation is not just an issue of fairness, but also an issue of life and death. Comparing the wealthiest to most impoverished community areas, Chicago has a 16-year life expectancy gap. Economic injustice is one of the root causes of health inequities—unfair and remediable differences in health status and outcomes observed across population groups—listed in Healthy Chicago 2.0, the Chicago Department of Public Health’s plan for achieving health equity, which Mayor Emanuel has publicly praised and claimed to support. TIF could be used as a powerful economic lever for reducing economic and health inequities, but an overhaul is needed.

Unfortunately, politics has delayed reform. Mayor Emanuel and the Chicago City Council have a responsibility to advance economic opportunity and health equity for all Chicagoans. The time to reform TIF is now.

The map on the left, prepared by the Chicago Department of Public Health during the community health assessment phase of Healthy Chicago 2.0 development, shows hardship in the City of Chicago. The hardship index combines six socioeconomic indicators into one score (dependency, crowded housing, poverty, per capita income, unemployment, and high school graduation). This serves as a rough proxy for relative community development need.

The map on the right was developed by the Chicago Reader for a 2015 story by Ben Javorsky and Mick Dumke on TIF spending during Chicago Mayor Rahm Emanuel’s first term, titled Who wins and loses in Rahm’s TIF game?

The maps show that the TIF system as it is being used in Chicago overly focuses community development dollars in some of the wealthier parts of Chicago that have lower hardship than those areas of the city receiving less, with 48% of TIF spending during the time period in the Reader story going to the central business district, an area that is not blighted or an area in which development would not otherwise occur.