What is a Transit TIF?
In 2016, the Illinois General Assembly approved a new financial tool known as Transit Tax Increment Financing or “Transit TIF.” Transit TIF is an economic development tool to support investment in large-scale, long-term transit projects. The Chicago Transit Authority (CTA) is seeking a Transit TIF designation for the Red Line Extension Project. The Transit TIF is needed in order for CTA to secure as much as $2 billion in federal funds for the much-needed rail extension south of 95th/Dan Ryan.
Such projects are typically funded by a mix of federal, state and local dollars. TIF has been used across the nation to provide a portion of the local financial commitment for transit projects. In Chicago, a Transit TIF was used to support a portion of the costs of the CTA Red Purple Modernization (RPM) Phase One project.
TIF is a value-capture funding source. A traditional TIF district is typically established to invest in projects that will stimulate economic development in a defined area. TIF funds are created by the growth in property value that occurs because of investment. For taxing purposes, a base equalized assessed value, or base EAV, for all properties located in the district is first established, and the tax generated based on this value continues to go to the existing taxing bodies. The tax generated based on the growth in property value (known as increment) goes to the TIF district to fund projects.
To learn more about TIF in Chicago, view maps of districts, and more visit the City’s website here.
How will this take place?
In 2016, the Illinois TIF Act was amended to allow for a new type of TIF district to fund certain local transit projects. Similar to traditional TIF, Transit TIF funds are created by growth in property value.
Transit TIFs are different from traditional TIFs in a few ways. Transit TIFs can be designated for 35 years, in comparison to the 23-year designation for traditional TIFs. This timing aligns more closely with financing mechanisms most commonly used for transit projects. Transit TIFs also share increment with other taxing districts, rather than using the entire incremental revenue stream to support projects within the Transit TIF district. Importantly, Chicago Public Schools (CPS) receives its entire proportional share of incremental revenues from a Transit TIF. Of the remaining non-CPS revenues, 20% are allocated to the other taxing districts, while the remaining 80% are used to fund the specific transit improvement.
Similar to other TIF districts, establishing this Transit TIF district will include a robust public process, including a public meeting, publishing a feasibility study and redevelopment plan, a public hearing at the Community Development Commission for their approval, Plan Commission approval of the land use plan, and a Joint Review Board meeting. The City Council will then vote to approve the Transit TIF for official designation.
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How will the Transit TIF be utilized for RLE?
For the Red Line Extension (RLE), the Transit TIF will be used to fund a significant share of the local funding that is needed to leverage as much as $2 billion in federal funding. The RLE Transit TIF is also an Equity TIF – the first of its kind. It will leverage the success of transit-served areas in downtown and near-South Chicago to fund the RLE project and transform Far South Side neighborhoods.
According to the TIF Act, the boundary for the RLE Transit TIF can consist of parcels located within an area ½ mile to the east and west of the current and future Red Line, between Madison Street to the north and 134th Street to the south, excluding the area within existing TIF districts. These parcels do not need to be contiguous (or touching). Increment generated from the Transit TIF parcels can be spent on the eligible transit project (in this case, the Red Line Extension) within the overall area from Madison to 134th.
The RLE Transit TIF boundary (the area generating the increment) will extend from Madison Street on the north to Pershing Road on the south. View the RLE Transit TIF Redevelopment Plan for more information about the Transit TIF district and how funding will be used.
Public Meeting and Feedback
The RLE Project and proposed Transit TIF district designation were discussed at a public meeting on July 21, 2022. The public meeting included a presentation by CTA and City of Chicago representatives followed by a comment period, during which members of the public asked questions and provided input on the proposed Transit TIF.
Date: Thursday, July 21, 2022
Time: Doors open at 5:00 p.m.(In-Person), presentation and Zoom webinar began at 5:30 p.m.
Location: Harold Washington Library Center, lower level (400 S. State St., Chicago, IL 60605)
View the announcement flyer: English, Español, 普通话, 廣東話
The public meeting was hosted on Zoom simultaneously. Recordings of the Zoom webinar can be viewed here: English, Español, 普通话, 廣東話
American Sign Language, Spanish, Cantonese and Mandarin interpretation were available during the in-person public meeting and Zoom webinar. Closed captioning was available via Zoom webinar only. The Harold Washington Library Center is also ADA accessible.
Frequently asked questions about TIF
No, your property tax bill will not change because you are in a Transit TIF. The RLE Transit TIF is not an additional tax levy and an individual homeowner or business within the RLE Transit TIF will not see an increase in taxes in comparison to those who are outside the Transit TIF.
The Transit TIF allows the City to keep intact any existing non-transit TIF districts, so that existing economic development initiatives can continue. Existing TIF districts are excluded from the Transit TIF district.
According to the TIF Act, the boundary for the RLE Transit TIF can consist of parcels located up to a half-mile from the current and future Red Line between Madison Street to the north and 134th Street to the south. The proposed RLE Transit TIF boundary has been established to generate only enough money to support a share of the local funding for the project. Based on current TIF projections and expected financing costs, the boundary only has to extend from Madison Street south to Pershing Road to generate the required revenues. The boundary also excludes existing TIF districts.
The RLE Transit TIF will leverage the success of downtown and the Near South Side in order transform Far South Side neighborhoods. RLE has equity at its foundation and is a transportation equity project. The RLE Transit TIF will fund affordable rapid transit to historically underserved and predominantly African American communities on Chicago’s Far South Side. This will not only directly impact residents and businesses south of 95th Street but will also benefit the RLE Transit TIF area and the entire City.
The CTA directed $310 million in its Capital Improvement Program (2022-2025) towards the RLE Project to fund engineering and design activities. This is in addition to the $75 million that is currently being used for environmental review and preliminary engineering work. In 2021, CTA was awarded a $30 million grant from the competitive federal Congestion Mitigation and Air Quality (CMAQ) program, which is overseen by our regional planning organization CMAP (Chicago Metropolitan Agency for Planning). CTA may seek additional CMAQ funding in the next round in 2023.
These funds are part of the non-Capital Investment Grants (CIG) match for the federal New Starts grant program. These financial investments demonstrate the CTA’s commitment to the RLE Project, to the community, and to the FTA, the federal agency to which the CTA will apply for a portion of project funding.
Transit TIF revenues can only be used to finance the development, expansion, or rehabilitation of new or existing transit passenger stations; transit maintenance, storage, or service facilities; or rights of way for use in providing transit services. The RLE Transit TIF funds can only be used for the Red Line Extension project within the TFIA (a half-mile of the current and future Red Line between Madison Street to the north and 134th Street to the south).