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Only Mixed-Use TIFs Raise Home Values
Newswise — Tax increment financing districts raise the value of nearby housing only if the district supports both residential and commercial development, according to a new study by researchers at the University of Illinois at Chicago.
If the TIF supports only industrial and commercial uses, nearby housing appreciates less than housing farther from the district, said TIF expert Rachel Weber, the study's co-author and associate professor of urban planning and policy at UIC.
Chicago relies heavily on its TIF districts (which number at least 135) to subsidize the development of factories, commercial/residential buildings and beautification, according to the report. Many are on land in rapidly appreciating neighborhoods like the Loop, the Clybourn Corridor and Uptown.
The researchers studied the appreciation of single-family homes in Chicago that sold at least twice between 1993 and 1999, controlling for structural characteristics, neighborhood conditions and activities within the TIF districts.
Industrial TIF districts depress nearby home values because factories generally are noisy, polluting and unattractive, while many commercial TIF districts attract big-box retailers that bring too much traffic and too little pedestrian access, the researchers found.
"On the other hand, homes tend to appreciate more than they would without TIF if the TIF attracts high-end residential units with some ground-floor convenience retail," Weber said, noting that such development has become prevalent in Chicago.
In the March issue of the journal Regional Science & Urban Economics, the researchers report that TIF alone is unlikely to increase housing values enough to displace large numbers of low-income households.
"TIF is an easy target for opponents of gentrification," Weber said. "But the development dynamics in the area and the nature of land uses within the TIF district will influence appreciation more than the mere designation of a TIF district."
UIC ranks among the nation's top 50 universities in federal research funding and is Chicago's largest university with 25,000 students, 12,000 faculty and staff, 15 colleges and the state's major public medical center. A hallmark of the campus is the Great Cities Commitment, through which UIC faculty, students and staff engage with community, corporate, foundation and government partners in hundreds of programs to improve the quality of life in metropolitan areas around the world. For more information about UIC, please visit http://www.uic.edu
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