On Gapers Block, a blog dedicated to all things Chicago, is a dicussion of tax increment financing in the city:
Chicago is perhaps the best place in the country to see the impact, both good and bad, that Tax Increment Financing districts can have on a city. TIF districts - those peculiar redevelopment schemes that hold the line on current property taxes within a designated area, and then funnel all future property tax increases straight back into redevelopment (as opposed to financing basic public services) - were nearly always on standby during Mayor Richard M. Daley's tenure. At their best, Daley's TIFs solidified the tax base and quarterbacked increased development in certain areas, most vividly seen in the Central Loop TIF.
Begun by Mayor Harold Washington in 1984, when the Loop did indeed contain areas of blight, Daley extended the life of the Central Loop TIF to seemingly great effect. Before eventually expiring in 2008, the TIF district helped spearhead the Loop's renewal, ushering in an era of huge expansion that increased the tax base and businesses within its borders, and saw a rise in the estimated assessed land value in the district to $2.6 billion from its original $985 million. The renewed strength and vibrancy of Chicago's core allowed the city to comeback from its "buckle-on-the-Rust-Belt" lows, and become a relevant player on the Global City index.
Of course, the Central Loop TIF is but a tiny part of the story. While TIFs can be great vehicles of investment in neighborhoods, often they are not the simple fix for areas that they portend to be. For starters, the subjective assignment and creation of TIF districts skews the market and incentives for development where demand is inherent. In Chicago, where the disparity between TIF districts is immense, one man's blight is another man's aspiration. Nearly no one would argue with the fact that the destitute area surrounding the Ogden/Pulaski TIF district in the Lawndale neighborhood displays a greater need for subsidy-induced development than Chicago's Loop. Yet, Daley's downtown focus ensured that the "blighted" CBD continued to be invested via TIF well-beyond its logical expiration.