"Tax increment financing (TIF) is currently the most important fiscal instrument for local development initiatives in this country. In theory, a TIF project requires no new taxes, and pays for itself by expanding the value of the tax base. However, many state TIF programs have the potential to encourage misallocation of resources, with both specific legislative provisions and larger institutional factors providing incentives for unproductive investments. Three common structural elements of TIF can be especially problematic: The interpretation of, “blight,” the assumption that future increases in property value are caused by the TIF project, and the ability of a TIF district to appropriate the future tax base growth of other, overlapping jurisdictions, most notably school districts. Clarity and transparency are essential to citizen oversight, but many TIF programs are largely hidden from taxpayer notice. Debt limits and a requirement of voter approval constitute a deliberate check on municipal borrowing, but legislatures and courts have generally agreed that bonds secured by tax increment financing do not constitute debt for these purposes. Yet the earmarking of taxes on future increases in property values can function as a type of unrecognized municipal debt, presenting problems of accountability and repayment capacity common to state and local borrowing of all kinds."

Download the rest of Joan Youngman's paper here: TIF at a Turning Point: Defining Debt Down (2011), Lincoln Institute of Land Policy Working Paper No. WP11JY1.

This contains some enormously interesting details on Chicago style TIF use and abuse.