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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

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  • Brent C. Smith

Abstract

The analysis in this article examines the impacts of one of the more prominent economic development tools, tax increment financing (TIF) districts, on the local commercial real estate market. The study area is the city of Chicago, a community with a long history of reliance on TIF districts as a means to foster local development initiatives. A treatment effects model is used to address the selection bias often attributed to studies of public policy impacts on real estate markets. The results indicate that commercial properties located within designated TIF districts exhibit higher rates of appreciation after the area is designated a qualifying TIF district.

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  • 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.
    • Handle: RePEc:bla:reesec:v:37:y:2009:i:2:p:209-234
    DOI: 10.1111/j.1540-6229.2009.00240.x
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    Cited by:

    1. Collin D. Hodges & Heather M. Stephens, 2022. "Does municipal incorporation always increase property values?," Growth and Change, Wiley Blackwell, vol. 53(1), pages 200-220, March.
    2. Yuliia Rohozian & Svitlana Noskova, 2017. "Interregional Cooperation As A Prerequisite For The Economic Development Of Amalgamated Territorial Communities In Ukraine," Baltic Journal of Economic Studies, Publishing house "Baltija Publishing", vol. 3(5).
    3. Anita Yadavalli & Jim Landers, 2017. "Tax Increment Financing: A Propensity Score Approach," Economic Development Quarterly, , vol. 31(4), pages 312-325, November.
    4. Yadavalli, Anita & Delgado, Michael, 2018. "Tax Increment Financing and Spatial Spillovers," 2018 Annual Meeting, August 5-7, Washington, D.C. 274490, Agricultural and Applied Economics Association.
    5. Czurylo, Todd, 2023. "The effect of tax increment financing districts on job creation in Chicago," Journal of Urban Economics, Elsevier, vol. 134(C).
    6. Hasan ALPAGU, 2014. "The Contradictions of Free Market System and The Impacts of FDI and Foreign Trade on Economy," Turkish Economic Review, KSP Journals, vol. 1(1), pages 7-15, December.
    7. T. William Lester, 2014. "Does Chicago’s Tax Increment Financing (TIF) Programme Pass the ‘But-for’ Test? Job Creation and Economic Development Impacts Using Time-series Data," Urban Studies, Urban Studies Journal Limited, vol. 51(4), pages 655-674, March.
    8. Ahmed Rachid El-Khattabi & T. William Lester, 2019. "Does Tax Increment Financing Pass the “But-for†Test in Missouri?," Economic Development Quarterly, , vol. 33(3), pages 187-202, August.
    9. 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.
    10. Benito Arruñada & Amnon Lehavi, 2010. "Prime property institutions for a subprime era: Toward innovative models of homeownership," Economics Working Papers 1217, Department of Economics and Business, Universitat Pompeu Fabra.
    11. 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.
    12. Agbarakwe, Ugochukwu Henry & Anowor, Oluchukwu F, 2018. "Government Intervention and Economic Development: Lessons from Songhai Development Initiative Farm in Rivers State, Nigeria," International Journal of Economics and Financial Research, Academic Research Publishing Group, vol. 4(1), pages 13-21, 01-2018.
    13. Alan Sage & Mike Langen & Alex van de Minne, 2023. "Where is the opportunity in opportunity zones?," Real Estate Economics, American Real Estate and Urban Economics Association, vol. 51(2), pages 338-371, March.
    14. 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.
    15. 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.
    16. Edward Feser, 2013. "Isserman’s Impact," International Regional Science Review, , vol. 36(1), pages 44-68, January.

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