Chicago Gets New Transit TIF Authority

In a post back in May, I noted that Chicago was seeking legislative authority from the State of Illinois to pursue TIF districts around transit projects. As discussed in Streetsblog Chicago, the bill passed and will allow CTA to collect incremental property tax dollars to fund system improvements. As noted by CityObservatory, the transit value creation argument may be weak enough that the redirection of these tax revenues to transit could be contested.

At a conceptual level, the link between increased property values along these lines and the transit services themselves is murky. As with most value capture in the United States, the additional revenue won’t be based on some sophisticated econometric model meant to capture exactly how much extra value was created by transit: it will just assume that all new value is a result of the transit lines—or perhaps even the additional value of the rehabbed lines over their in-need-of-maintenance state. While evidence certainly suggests that rapid transit contributes to growing property values, many neighborhoods in central Chicago outside of rapid transit sheds have been growing in value as well, suggesting that there is a general trend towards the center city that goes beyond just transit access. And in some other cities, a general shortage of housing has been pushing up real estate values across entire metropolitan areas, making the connection even murkier. Perhaps this is a philosophical splitting of hairs. But if transit advocates justify new revenue by making the standard value capture argument and it doesn’t hold up, expect opponents to exploit that gap.

For this model to be replicable, it will have to work well in Chicago, including providing substantial transit funding and overcoming challenges to its implementation.