https://doi.org/10.1177/0891242419877944 Economic Development Quarterly 1–15 © The Author(s) 2019 Article reuse guidelines: sagepub.com/journals-permissions DOI: 10.1177/0891242419877944 journals.sagepub.com/home/edq Research and Practice Local governments utilize tax increment financing (TIF) to reverse depreciating property values, particularly in dis- tressed areas. TIF districts retain a proportion of their prop- erty tax revenues to finance development initiatives in the area and attract private investment. In the early years of TIF, only the most depressed communities were considered for the program. Across the nation, however, several states and cities removed or diminished the blight standard when desig- nating TIF districts. Research shows that nonblighted TIF districts perform at much higher levels, and earlier in the pro- cess as a result of their better economic positions, whereas blighted TIFs are not immediately prepared to compete for private investment, thus require more investments and time to experience noticeable growth (Briffault, 2010; Huddleston, 1982; Lester, 2014). While previous analyses of blight and TIF performance relied on individual indicators of blight, we focus on understanding the correlation between overall lev- els of blight and changes in the equalized assessed valuation (EAV) of property within TIF districts. Flexibility in the blight standards used to adopt TIF dis- tricts in Chicago, Illinois facilitated the adoption of more than 160 TIFs across communities that vary substantially in the presence of blight, both physical and economic, as well as racialized groups. Local critics argue that Chicago’s most blighted TIF districts exist in communities with predomi- nantly non-White populations, and TIF fails to adequately address blight in these particular spaces (Jorvasky, 2015; Jorvasky & Dumke 2015; McGhee, 2016; Spielman, 2015). In this study, we purport to test the validity of these claims by investigating if TIF district performance (change in EAV) negatively correlates to the current levels of physical and economic blight in districts. Using an interaction variable (blight × race), we also examine whether this relationship changes according to the proportion of non-White residents in the district. The analysis involves two composite blight measures. Aggregating conventional indicators of both blight types permits the measurement of overall physical and economic blight while also reducing the potential for multicollinearity resulting from the inclusion of related variables in the same estimated regression models (Nathan & Adams, 1976). To test the correlation between physical and economic blight, race, and TIF performance, we conducted quantile regres- sion analysis (QRA). 877944EDQ XX X 10.1177/0891242419877944Economic Development QuarterlyBlackmond Larnell and Downey research-article 2019 1 Loyola University, Chicago, IL, USA 2 Grand Valley State University, Grand Rapids, MI, USA Corresponding Author: Twyla Blackmond Larnell, Department of Political Science, Loyola University, 1032 West Sheridan Road, Coffey Hall 3rd Floor, Chicago, IL 60660, USA. Email: tblackmondlarnell@luc.edu Tax Increment Financing in Chicago: The Perplexing Relationship Between Blight, Race, and Property Values Twyla Blackmond Larnell 1 and Davia Cox Downey 2 Abstract Cities use tax increment financing (TIF) to trigger growth in blighted communities. Critics argue that Chicago’s broad conceptualization of “blight” facilitates the designation of TIF districts that do not resemble conventional notions of blight, bolstering their natural ability to generate capital, thereby exacerbating the gap between wealthy and poor minority spaces. This study examines Chicago’s TIF districts to determine whether blight levels and percentage of non-White residents interact to reduce the effectiveness of TIFs measured as the change in the equalized assessed valuation (EAV) of properties. Using composite indices to measure physical and economic blight, the results of a quantile regression analysis indicate that economically blighted TIFs with predominantly non-White populations outperform other districts. These findings run counter to expectations given that TIFs report high rates of growth in property values, yet they remain substantially blighted. This suggests a need to reconsider change in equalized assessed valuation as the measure of TIF effectiveness given that the “growth” in TIFs does not seem to reflect a higher quality of life for residents. Keywords tax increment financing, property values, blight, Chicago