The 2020 book, RECONOMICS: The Rise of Resilience Prosperity documented how—for well over half a century—Tax Increment Financing (TIF) has been one of the most effective methods ever invented for funding urban revitalization in the U.S.
But—also as documented in that groundbreaking book—far too many cities misuse, abuse and/or overuse it. They misuse it by applying it to sprawl projects. They abuse it by handing out TIF funds as unnecessary subsidies to politically-connected real estate developers. And some cities simply overuse it, to the point where public services deteriorate as a result of depleted general revenues.
On February 23, 2022, the city of Chicago, Illinois announced that it will acquire 6.3 acres of vacant land in the Pilsen neighborhood and make it available for affordable, mixed-use redevelopment through a measure approved by the City Council.
Comprising former industrial land on the 1600 and 1700 blocks of South Peoria Street, the property will be purchased for $12 million from PMG Investments LLC.
This is proper TIF usage: funding the cleanup and infrastructure improvements needed to attract private investment in the redevelopment of a distressed area. The fact that it’s focused on desperately-needed affordable housing makes it even better.
In conjunction with the purchase, the Chicago Department of Housing (DOH) will initiate community engagement activities to solicit stakeholder input on a future Request for Proposals (RFP) for one or more mixed-use projects that could include more than 280 affordable housing units.
The purchase agreement was negotiated with PMG in 2021 by multiple City departments through Mayor Lori Lightfoot’s commitments to affordable housing and the equitable use of Tax Increment Financing (TIF) revenues.
Land acquisition costs will be paid for with funds from the Pilsen Industrial Corridor TIF District.
Consisting of 28 individual lots, the site is a nexus of community concerns about gentrification, displacement and the potential impact of hundreds of new residential units being built.
In 2015, PMG proposed a 500-unit, mixed-use building on the property that was prevented from moving forward by a 2016 zoning change.
Environmental cleanup to enable a future residential project on the site is estimated to cost up to $1.5 million, which will be paid for by DOH after the City acquires the property.
Community engagement efforts will start later this year to determine a community vision for the RFP.
The visioning process will consider design, unit sizes, rental rates and public amenities, including direct connections to the long-planned El Paseo promenade.
“This is the first step in turning the single largest grouping of vacant land in Pilsen into a vibrant development that will provide much-needed affordable housing in a community that has lost more than a quarter of its Latino population,” DOH Commissioner Marisa Novara said.
“We look forward to the next steps, including how this land can serve its longterm residents and the surrounding neighborhood,” she added.
The acquisition could be completed early this year. Cleanup work is expected to conclude by the end of 2022.
Photo via Google Maps.