The next several years threaten a significant decrease in City’s resources for affordable housing, homelessness, community and economic development, and wealth-building initiatives. Although this is partially the result of the exhaustion of one-time pandemic resources, the more critical issue is the structural decline of long-term revenue sources. While this includes both cyclical and structural declines in DOH’s Affordable Housing Opportunity Fund (AHOF), and the volatile nature of NOF revenues, the most critical issue is the pending reduction of TIF revenue.  

Although the City has taken proactive steps to steadily reduce the size of its TIF program over the past 10 years, it has remained the most important and reliable source of funds for affordable housing and economic development. Over the last four years, the average TIF allocation to both departments totaled more than $300 million per year. 

TIF is, however, at the beginning of a significant wind-down with nearly 45 TIF districts nominally set to expire on or before December 31, 2027. The $311.1 million of incremental property taxes generated by those TIF districts in 2023 represented 48.9 percent of the City’s collections, net of Transit TIF IPT and declared surplus. As these expirations occur, however, it is not just the availability of funding that will be greatly reduced: the geography of TIF-eligible areas will also become increasingly limited. As a result, TIF is likely to become an even more skewed and inequitable funding source for key investments.  

While both DPD and DOH have other funding sources – including NOF and AHOF – they are not a replacement for TIF because they cannot generate a comparable level of funding. For context, the combined collections for both NOF and AHOF since 2016 is $276.7 million – nearly $25 million less than the recent annual allocations of TIF to both departments. Additionally, these sources are anticipated to face their own structural challenges in the near future because of a lack of predictability and reduced capacity. While these sources will continue to be important, they must be considered secondary given the larger funding needs to operate these programs.

These issues were temporarily addressed from 2022-2023, as both DOH and DPD received a significant infusion of capital from the Chicago Recovery Plan (CRP) in the form of General Obligation and Sales Tax Securitization Corporation (STSC) bond funds (collectively, CRP Funds). In total, this amounted to $366 million in new funds for DOH and DPD that were used on a wide variety of projects and programs. This allocation of funding had a significant effect on both departments’ ability to fulfill their core responsibilities and increase the reach of their programs.  

Although this represented an unprecedented shift to how Chicago has historically funded both affordable housing and commercial developments, it is the normal course of business for nearly all peer cities – including Los Angeles, New York, and Seattle.

The purpose of this site is to provide information being presented to the members of the City Council of the City of Chicago (the “City) in connection with their consideration of a proposed ordinance (the “Ordinance”) approving the issuance of the City’s general obligation bonds (the “ GO Bonds”) and (ii) authorizing the Sales Tax Securitization Corporation (“STSC”) to issue additional obligations (the “Sales Tax Obligations” together with the GO Bonds, the “Proposed Bonds”).  The Ordinance is expected to be  introduced in the City Council of the City on February 21, 2024.

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There is no assurance that the information contained on this site does not contain typographical or other errors which may have occurred in converting the original source document or other source materials to electronic format. Investment decisions should be made only after full review of an official statement or other disclosure document and other relevant documents and matters in connection with a particular issue of bonds, notes or other obligations.

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