Public works projects – such as road improvements, streetscaping, school construction and repair, and park improvements – are all eligible TIF costs. In fact, the estimated project budgets for the first 101 TIFs set aside up to $1.92 billion for public works projects over the 23-year lives of these districts. About $113 million has already been allocated.

Infrastructure improvements are among the best ways to spread the potential benefits of TIFs to those who already live, work, or run a businesses inside the district. Repairs to industrial streets and viaducts help to keep businesses – and the jobs they create – in Chicago. Without adequate transportation to their companies,  it is often difficult or impossible to receive and make shipments – a life or death issue for a manufacturer. Improvements to a commercial area – such as streetscaping or sidewalk repair – can make the area more desirable to potential customers, as well as to new companies that may hope to locate in the area. Park and school improvements can make a neighborhood a better place to live and raise children.

Public works projects can even help residential, commercial, and industrial areas to peacefully co-exist and eliminate the tension among competing land uses. Landscaping projects, for instance, can shield residential neighborhoods from the activity in commercial and industrial areas, and properly constructed industrial streets and viaducts direct truck traffic away from residential and commercial streets and onto the main arterial roads.

Supplement, Not Substitute

Tax Increment Financing is supposed to represent a targeted, intensive investment strategy to help revitalize a specific area.

TIF Funds Allocated for Infrastructure Industrial Areas $8,778,000 Commercial Areas $243,649,183 Residential Areas $28,696,170 Total Allocations $281,123,353 Total Budget for Public Works Projects in TIF Redevelopment Plans (121 TIFs): $1,923,118,110

TIFs are not supposed to take the place of existing forms of public investment. The City of Chicago each year publishes its Capital Improvement Program (CIP) – a five-year plan that contains a wide range of infrastructure and economic development projects paid for out of local, state, and federal revenues. While in some cases, it might make sense to pay for some projects in the CIP out of TIF funds, the TIF shouldn’t be expected to carry the entire burden by itself. Most TIFs don’t begin to generate substantial new money for redevelopment until they are at least five years old. That means there are a lot of priorities competing for a relatively small pool of money. In those early years of a TIF, when money is especially tight, infrastructure improvements funded from the City’s general revenues can be an effective way to “jump start” activity in the TIF in a way that can benefit existing residents and businesses.

Industrial Infrastructure in TIFs

There are two main types of infrastructure projects that benefit industry in Chicago: industrial street improvements and viaduct clearance improvements. Industrial streets are the roads that directly serve companies or industrial corridors. When they are inadequate or in a state of disrepair, truck traffic often is diverted onto residential or commercial streets in the area. In extreme cases, deliveries and shipments are unable to reach the company at all. Similarly, many of Chicago’s viaducts are too low for modern trucks. Deliveries and shipments have to take roundabout routes – often through residential neighborhoods – to reach their destination. Often, trucks get stuck under the viaducts, touching off a traffic nightmare for the entire area.

In 1996, 12 of the City’s industrial corridors developed “Model Industrial Corridor” plans that targeted infrastructure projects that are key to their future success and established long-term strategies for growth. Most of these areas have since become TIFs.  By using a combination of TIF funds and general City revenues to fast-track the top remaining priorities in the Model Industrial Corridor plan, industrial infrastructure improvements can be a catalyst for the creation of quality jobs.

Commercial Infrastructure in TIFs

Infrastructure can also help to revitalize commercial areas. Basic repairs to the streets and sidewalks in a neighborhood commercial district can make an area more appealing to customers and prospective businesses, as can streetscaping projects that make the area more attractive and accessible. In addition to beautification, lighting, street, and sidewalk improvements, streetscaping projects can improve parking in an area or help to manage traffic flow. These improvements can help attract new businesses to vacant properties in the area, but they can also help existing small businesses.  As the following table of TIF-funded infrastructure projects in commercial areas shows, the vast majority of TIF funds have, thus far, been spent or committed in central area districts.

Residential Infrastructure in TIFs

Basic neighborhood infrastructure projects – such as streets, sidewalks, alleys, sewers, and water mains – are typically funded through the City’s general revenues. General obligation bonds, sewer and water fees, and other City funds do – and should – pay for the basic infrastructure needs of our neighborhoods (though the City does not tend to invest in these projects as much as it should). Still, there is a role for TIFs in neighborhood infrastructure, particularly when it comes to specialized economic development projects or municipal facilities such as schools, parks, or libraries. As with commercial and industrial infrastructure, the key is to identify the public works projects that can help fast-track other revitalization activities in the neighborhood, then get those funded either through the TIF program or other public revenues. Again, the most important concept is supplement, don’t substitute.

Have TIFs Helped to Rebuild Neighborhood Infrastructure?

As you can see from the preceding charts, the lion’s share of new infrastructure spending paid for by TIFs has been in the older TIF districts in the Central City.  So far, TIFs have not provided a significant source of funding for neighborhood infrastructure projects in most TIFs.