After 20 Years, South Chicago TIFs Show Limits of a Core Development Tool

CONTACT
Gabby Abbott
Media@LUC.edu

CHICAGO—While Chicago’s tax-increment financing (TIF) districts collectively held a $3 billion fund balance in 2023 alone, two South Chicago TIF districts, South Chicago and Commercial Avenue, generated just $26.5 million and $32.2 million, respectively, over more than two decades. The stark gap is at the heart of a new study from Loyola University Chicago’s Institute for Racial Justice (IRJ), which found that TIF has failed to deliver large-scale neighborhood transformation in communities facing sustained disinvestment.

“Communities like South Chicago have been asking hard questions about tax-increment financing for years,” said Malik Henfield, IRJ founding dean and professor. “What this study does is put those questions into conversation with the data, so decision-makers, researchers, and residents are working from the same starting point. That’s the kind of infrastructure we’re building at IRJ.”

The numbers tell a story of profound inequity. Despite more than 20 years of TIF designation, South Chicago today faces unemployment at twice the city average, a 21% population decline since 2000, and property value growth that lags much of the city. More than 55% of South Chicago renters remain cost-burdened, and foreclosure rates during the 2008 crisis ran nearly double the citywide average, all while billions accumulated in the city’s broader TIF pool.

“This report underscores what Fifth Third has seen during years of place‑based investment in South Chicago through the Fifth Third Neighborhood Program: lasting economic progress happens when community priorities come first and capital is deployed in partnership,” said Robert McGhee, senior vice president and community impact territory manager for Fifth Third Bank,which provided financial support for the research. “While TIF can play an important role, this research makes clear that equitable development requires transparency, collaboration, and a broader mix of tools aligned to residents and small businesses. We’re proud to support work that strengthens how investment delivers real economic mobility at the neighborhood level.”

Based on the findings, IRJ recommends that across all actors, the core shift is the same: lead with community priorities first, then align resources accordingly.

“TIF is a financial tool, not an economic development strategy,” said Lauren Burdette, IRJ senior advisor. Burdette details how when community priorities come first, and public, private, and philanthropic partners align their resources accordingly, progress becomes more equitable, in an IRJ profile. She added, “Like any tool, it can be effective when used in the right situations, and ineffective when used inappropriately. As Chicago begins to wean itself off TIF as a primary funding source for economic development and affordable housing, it is essential that private sector, research, and civic leaders center community needs.”

Local groups, the City of Chicago, and the State of Illinois should reform and diversify their use of TIF, making it more equitable, transparent, and supplementary to broader economic development strategies, rather than the primary mechanism. Private sector, philanthropic, and university partners should shift from transactional, project-based engagement to sustained, community-driven partnerships that build trust and produce measurable long-term impact.

“There is an opportunity for the City to work with South and Westside developers to make it easier for them to make use of these scarce resources,” said Angela Hurlock, chief executive officer for Claretian Associates, a Chicago-based nonprofit community development organization that partnered with IRJ on the research for the report. “As TIF funds in some neighborhoods accumulate at a slower pace than others, it is also crucial to make sure that they are being used in the most impactful projects.”

More about the challenges, success stories, and recommendations to improve the use of TIFs can be found in the full report, “Rethinking Tax Increment Financing in Chicago: Findings from South Chicago and Implications for Equitable Development.”  IRJ further details the human impacts and nuances of TIFs, in the article, “Hope in Increments.”

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About Loyola University Chicago

Founded in 1870, Loyola University Chicago is one of the nation’s largest Jesuit, Catholic universities, recognized for its academic excellence, commitment to community engagement, and leadership in sustainability. A Carnegie R1 research institution, Loyola leverages its status as one of an elite group of universities with the highest level of research activity to advance knowledge that serves communities and creates global impact. With 15 schools, colleges, and institutes—including Business, Law, Medicine, Nursing, and Health Sciences—Loyola operates three primary campuses in the greater Chicago area and one in Rome, Italy, that provide students a transformative, globally connected learning experience. Consistently ranked among the nation’s top universities by U.S. News & World Report, Loyola is a STARS Platinum-rated institution that is ranked as one of the country’s most sustainable campuses by The Princeton Review and has earned distinctions from AmeriCorps and the Carnegie Foundation for its longstanding record of service and community engagement. Guided by its Jesuit mission and commitment to caring for the whole person, Loyola educates ethical leaders who think critically, act with purpose, and strive to create a more just and sustainable world.

About the Institute for Racial Justice
The Institute for Racial Justice (IRJ) at Loyola University Chicago is a research-to-action infrastructure that connects community knowledge, rigorous scholarship, and decision-making environments to advance racial equity. IRJ ensures that research findings reach the people and systems positioned to act, translating evidence into policy and practice. Learn more at luc.edu/irj.

About Fifth Third

Fifth Third is a bank that’s as long on innovation as it is on history. Since 1858, we’ve been helping individuals, families, businesses and communities grow through smart financial services that improve lives. Our list of firsts is extensive, and it’s one that continues to expand as we explore the intersection of tech-driven innovation, dedicated people and focused community impact. Fifth Third is one of the few U.S.-based banks to have been named among Ethisphere’s World’s Most Ethical Companies^® for several years. With a commitment to taking care of our customers, employees, communities and shareholders, our goal is not only to be the nation’s highest performing regional bank, but to be the bank people most value and trust. Fifth Third Bank, National Association is a federally chartered institution. Fifth Third Bancorp is the indirect parent company of Fifth Third Bank and its common stock is traded on the NASDAQ^® Global Select Market under the symbol “FITB.” Investor information and press releases can be viewed at www.53.com. Deposit and credit products provided by Fifth Third Bank, National Association. Member FDIC.

About Claretian Associates
Claretian Associates is a community housing development organization (CHDO) that serves the community of South Chicago and surrounding areas by focusing on the three pillars of housing, convening and violence prevention. Our mission is to carry on a rich and collaborative tradition, providing housing and vital services in South Chicago and the surrounding communities, which benefits our residents’ safety and wellbeing. Since our founding in 1991, Claretian has developed over 250 units of affordable housing, with an additional 81 units currently under construction. We are the only locally based nonprofit housing developer in the South Chicago region that advocates for community development driven by the people of Southeast Chicago for the last 35 years. Each project was inspired and informed by the people of the South Chicago community and designed to incorporate green elements that promote the wellness of our residents. In addition to housing, Claretian has long invested in South Chicago and the surrounding communities, employing over 600 south side Chicago residents in youth and safety programs.