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Does Tax Increment Financing Raise Urban Industrial Property Values?

Author

Listed:
  • Rachel Weber

    (Urban Planning and Policy Program, University of Illinois at Chicago, 412 South Peoria Street (MC 348), Chicago, IL 60607, USA, rachelw@uic.edu)

  • Saurav Dev Bhatta

    (Urban Planning and Policy Program, University of Illinois at Chicago, 412 South Peoria Street (MC 348), Chicago, IL 60607, USA, sdbhatta@uic.edu)

  • David Merriman

    (School of Business Administration, Loyola University Chicago, 25E. Pearson Street, Chicago, Illinois 60611, USA, dmerrim@luc.edu)

Abstract

The paper examines the impact of tax increment financing (TIF) on the value of industrial properties in Chicago. Because TIF designation may be self-selected, a two stage procedure is used to estimate the influence of TIF. The authors find that the value of industrial parcels located in mixed-use TIF districts (i.e. those that also contain commercial or residential properties) is higher than that of similar parcels that are not located in a TIF district. However, the value of industrial parcels that are located in homogeneous industrial use TIF districts is no higher and in some specifications is lower than that of similar parcels not located in a TIF district. These divergent results may be best explained by industrial parcel owners' desire to convert their properties to non industrial uses.

Suggested Citation

  • Rachel Weber & Saurav Dev Bhatta & David Merriman, 2003. "Does Tax Increment Financing Raise Urban Industrial Property Values?," Urban Studies, Urban Studies Journal Limited, vol. 40(10), pages 2001-2021, September.
    • Handle: RePEc:sae:urbstu:v:40:y:2003:i:10:p:2001-2021
    DOI: 10.1080/0042098032000116086
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    References listed on IDEAS

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    Cited by:

    1. Timothy J. Bartik & George Erickcek, 2014. "Simulating the Effects of the Tax Credit Program of the Michigan Economic Growth Authority on Job Creation and Fiscal Benefits," Economic Development Quarterly, , vol. 28(4), pages 314-327, November.
    2. Ooi, Joseph T.L. & Le, Thao T.T., 2013. "The spillover effects of infill developments on local housing prices," Regional Science and Urban Economics, Elsevier, vol. 43(6), pages 850-861.
    3. Rebelo, Emília Malcata, 2017. "Land betterment capture revisited: A methodology for territorial plans," Land Use Policy, Elsevier, vol. 69(C), pages 392-407.
    4. Christopher E. Bartels & Jeremy L. Hall, 2012. "Exploring Management Practice Variation in Tax Increment Financing Districts," Economic Development Quarterly, , vol. 26(1), pages 13-33, February.
    5. Weber, Rachel & Bhatta, Saurav Dev & Merriman, David, 2007. "Spillovers from tax increment financing districts: Implications for housing price appreciation," Regional Science and Urban Economics, Elsevier, vol. 37(2), pages 259-281, March.
    6. Byrne, Paul, 2017. "Economic Development Incentives, Reported Job Creation, and Local Employment," Working Papers 07791, George Mason University, Mercatus Center.
    7. Huub Ploegmakers & Pascal Beckers, 2015. "Evaluating urban regeneration: An assessment of the effectiveness of physical regeneration initiatives on run-down industrial sites in the Netherlands," Urban Studies, Urban Studies Journal Limited, vol. 52(12), pages 2151-2169, September.
    8. Brent C. Smith, 2009. "If You Promise to Build It, Will They Come? The Interaction between Local Economic Development Policy and the Real Estate Market: Evidence from Tax Increment Finance Districts," Real Estate Economics, American Real Estate and Urban Economics Association, vol. 37(2), pages 209-234, June.
    9. Robert T. Greenbaum & Jim Landers, 2014. "The Tiff Over TIF: A Review of the Literature Examining the Effectiveness of the Tax Increment Financing," National Tax Journal, National Tax Association;National Tax Journal, vol. 67(3), pages 655-674, September.
    10. Jasper Beekmans & Huub Ploegmakers & Karel Martens & Erwin van der Krabben, 2016. "Countering decline of industrial sites: Do local economic development policies target the neediest places?," Urban Studies, Urban Studies Journal Limited, vol. 53(14), pages 3027-3047, November.
    11. Charles W. Swenson, 2015. "The Death of California Redevelopment Areas," Economic Development Quarterly, , vol. 29(3), pages 211-228, August.
    12. Marina Spahlinger & Nancy Wayne, 2019. "Community Revitalization Levy as a Municipal Financing Mechanism in Alberta," SPP Research Papers, The School of Public Policy, University of Calgary, vol. 12(4), February.
    13. Phuong Nguyen-Hoang, 2014. "Tax Increment Financing and Education Expenditures: The Case of Iowa," Education Finance and Policy, MIT Press, vol. 9(4), pages 515-540, October.
    14. Paul F. Byrne, 2006. "Determinants of Property Value Growth for Tax Increment Financing Districts," Economic Development Quarterly, , vol. 20(4), pages 317-329, November.
    15. Smith, Brent C., 2006. "The impact of tax increment finance districts on localized real estate: Evidence from Chicago's multifamily markets," Journal of Housing Economics, Elsevier, vol. 15(1), pages 21-37, March.
    16. Paul F. Byrne, 2010. "Does Tax Increment Financing Deliver on Its Promise of Jobs? The Impact of Tax Increment Financing on Municipal Employment Growth," Economic Development Quarterly, , vol. 24(1), pages 13-22, February.
    17. Twyla Blackmond Larnell & Davia Cox Downey, 2019. "Tax Increment Financing in Chicago: The Perplexing Relationship Between Blight, Race, and Property Values," Economic Development Quarterly, , vol. 33(4), pages 316-330, November.
    18. Jeremy L. Hall & Christopher E. Bartels, 2014. "Management Practice Variation in Tax Increment Financing Districts," Economic Development Quarterly, , vol. 28(3), pages 270-282, August.
    19. Czurylo, Todd, 2023. "The effect of tax increment financing districts on job creation in Chicago," Journal of Urban Economics, Elsevier, vol. 134(C).

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