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Tuesday, January 12, 2021

Illinois Appellate Court Rules on Tax Increment Financing Case

In Grassroots Collaborative v. City of Chicago, an Illinois court held  that two Illinois groups could not sue the City of Chicago for allegedly creating tax increment finance “TIF” districts in a racially discriminatory way. Specifically, the court found that the groups did not have "standing" to sue the City (the requirement that a plaintiff directly suffered or will suffer a cognizable legal injury).

TIF is a program used by municipalities to economically develop blighted, conservation, or formerly industrial areas by setting aside a portion of property taxes for redevelopment projects in the district. After the creation of a TIF district, a municipality assesses the value of each property within the geographic boundary of the district. The assessment establishes a base level where local government tax authorities—like park and school districts—continue receiving monies to fund public services. If property values in the district increase, additional tax monies are diverted to the municipality to use for redevelopment projects in the district. 

When establishing a TIF district, municipalities must create a comprehensive redevelopment plan to use tax funds. Further, municipalities must show private enterprise is not reasonably anticipated to grow the area requiring the TIF program to help make those investments. 

The groups allege the City, for the last 30 years, had been illegally establishing TIF districts in areas that were already experiencing economic growth resulting in predominantly white areas of the City exclusively benefiting from increasing tax revenue. They argued that because these areas were not contributing their excess taxes to various local government taxing authorities, other less affluent areas had to compensate for budget shortfalls. The groups referenced two specific districts: Cortland and Chicago River.

Both Grassroots Collaborative and Raise Your Hand for Public Education, the not-for-profit plaintiffs in the case, argued the City’s actions prompted each to divert resources away from their other advocacy initiatives and would eventually undermine or frustrate their missions to address economic inequity throughout Chicago.

The court dismissed the case finding that the two groups did not have "standing" to sue the City because they failed to show how they suffered impairment to the services it offers or the performance of their mission in order to demonstrate an injury that would allow them to sue. 

Post Authored by Mike Halpin & Julie Tappendorf, Ancel Glink


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