Spillovers from tax increment financing districts: Implications for housing price appreciation

Abstract

Abstract Tax increment financing (TIF) has been both applauded and castigated for causing rapid appreciation of nearby residential properties. We study the spillover effects of TIF on the appreciation of single-family Chicago homes that sold multiple times between 1993 and 1999. After controlling for structural characteristics of the home, neighborhood conditions, and information about the nature and scale of activities within TIF districts, we find that proximity to industrial TIF districts is actually associated with a decrease in the rate of appreciation. However, proximity to mixed-use TIF districts that contain both commercial and residential parcels increases the appreciation of nearby houses. We discuss some of the policy implications of our findings in the conclusion.