Rationalizing tax increment financing in Chicago

Financial geography III: The financialization of the city

“…campaign finance) and securing key roles in business civic organisations.It could be argued that urban policy has become a financial instrument (Lake, 2015), or at any rate some urban policies are turned into financial instruments. Besides securitization and Real Estate Investment Trusts (or REITs – see second progress report; Aalbers, 2019a), there are a range of new financial instruments that have been implemented: tax increment financing (TIF) in the US (Kirkpatrick, 2016; Pacewicz, 2013; Teresa, 2017; Weber, 2010) and UK (Baker et al, 2016; O’Brien and Pike, 2017; Ward, 2018), sales-tax TIF in the US (Launius and Kear, 2019; Sroka, 2019), social impact bonds in the US (Lake, 2015; Rosenman, 2019; Tse and Warner, 2018) and UK (Berndt and Wirth, 2018; Dowling, 2017; Langley, 2018a), development impact bonds, managed by the World Bank (Mawdsley, 2018; Saldinger, 2016), opportunity bonds in the US (Gotham, 2016), special impact financing in the US (McCubbins and Seljan, 2018), revenue and tax anticipation notes, certificates of participation and fiscal stabilization bonds in the US (Peck and Whiteside, 2016), tender option bonds in the US (Kirkpatrick, 2016), revenue bonds and local asset backed vehicles in the UK (Strickland, 2016), lender option borrower option (LOBO) in the UK (Möller, 2016), a range of different types of interest rate derivatives across the Global North (Möller, 2016), interest rate swaps, constant maturity swaps and swaptions in Germany and Italy (Hendrikse and Sidaway, 2014; Lagna, 2015), financial engineering instruments in the European Union’s Cohesion Policy (Dąbrowski, 2014; Anguelov et al, 2018), transferable development rights in Taiwan (Yang and Chang, 2018), Certificados do Potencial Adicional de Construção (Certificates of Additional Building Rights or CEPACs) in Brazil (Fix, 2011; Mosciaro et al, 2019; Pereira, 2015; Klink and Stroher, 2017), local financing platforms in China (Pan et al, 2017), and dipiao in China (…”

“We just need the developer to develop”: Entrepreneurialism, financialization and urban redevelopment in Lexington, Kentucky

“…A lot continues to be written about the growing use of ever more speculative financial instruments by US city governments, particularly that subset that generate debt, such as Tax Increment Financing (TIF) (Pacewitz, 2013, 2016; Sroka, 2016, 2020; Teresa, 2017). Not without precedence, nevertheless, the argument is that recent decades have seen an expansion in the use of an ever-more diverse and complex set of financial instruments to support urban economic and infrastructural development in the US.…”

“…Tax Increment Financing (TIF) is “a local economic development policy that allows municipalities to designate a “blighted” area for redevelopment and securitize the expected increase in property taxes from the area to pay for initial and ongoing redevelopment expenditures” (Weber, 2010: 258). The use of TIF is now widespread across the United States (Beyer, 2015; Briffault, 2010; Launius and Kear, 2019; Mann, 2001; Pacewicz, 2016; Peterson, 2014; Sroka, 2020; Teresa, 2017). Originating in California in the early 1950s as companion to the US Community Redevelopment Act (1945), TIF is now on the books of every US state statue with the exception of Arizona and has evolved in a fragmented fashion (Johnston and Mann, 2001).…”

“…In contrast are those who take a more critical stance. Arguing, "TIF is not a passive tool, but rather an agent of spatial transformation" (Pacewicz, 2016: 283), there have been various critiques (Briffault, 2010;Kirkpatrick and Smith, 2011;Lefcoe, 2011;LeRoy, 2008;Pacewicz, 2013Pacewicz, , 2016Teresa, 2017;Weber, 2002Weber, , 2010. These have argued that the use of TIF has facilitated the displacement of poorer communities, the gentrification of many US downtowns, constituting a revenue "loss to noncity taxing governments" (Pacewicz, 2016: 282) and raising issues of democratic accountability, financial equity, social justice and the right to the city.…”

“…The incremental, stop-start, gradual and piecemeal emergence of this redevelopment is particularly revealing for what is says about the capacity of some US city governments to use speculative financial and taxation instruments. If indeed, as some have suggested, we are witnessing the financialization of US urban redevelopment policy (Farmer and Poulos, 2019;Kirkpatrick, 2016;Launius and Kear, 2019;Pacewicz, 2013Pacewicz, , 2016Singla and Luby, 2020;Sroka, 2016Sroka, , 2020Teresa, 2017;Weber, 2010), then it appears to be an on-going, geographically variegated and uneven process. As neither a prominent flagship or landmark development nor a story of terminal downtown decline, we want to suggest that most US cities are likely to constitute a marginalized majority that muddle through, tacking a path between the ever-present spectre of "failure" and the distant prospect of "success" (Williams and Pendras, 2013).…”